With the objective of harnessing new technologies for enhancing digital payments, the RBI has proposed enabling ‘conversational payments’ on UPI, which will enable users to engage in conversation with AI-powered systems to make payments.

“Conversational instructions hold immense potential in enhancing ease of use and, consequently the reach of the UPI system,” said the RBI, adding that this channel will be made available in both smartphones and feature phone-based UPI channels, thereby helping in the deepening of digital penetration in the country.

The facility will, initially, be available in Hindi and English and subsequently be made available in more Indian languages.

“AI-driven payments, which are essentially voice payments, are still in a nascent stage; adoption will depend on setting of uniform standards to drive interoperability among payment apps. It will also allow voice assistants to initiate payments, thereby expanding the market for payment service providers and strengthen payments in the IOT space,” said Ranadurjay Talukdar, Partner and Payments Sector Leader, EY India.

UPI-Lite

The central bank is also looking to  introduce offline payments on UPI using Near Field Communication (NFC) technology through ‘UPI-Lite’ on-device wallet. UPI-Lite was launched in September 2022 to optimise processing resources for banks, thereby reducing transaction failures. It processes over 1 crore transactions per month at present.

“This feature will not only enable retail digital payments in situations where Internet / telecom connectivity is weak or not available, it will also ensure speed with minimal transaction declines,” said the central bank.

“This move ensures swift transaction processing, solidifying NFC payments as a secure and user-friendly payment alternative. By leveraging this state-of-the-art technology, transaction volumes are set to witness a substantial increase, granting users a seamless, hassle-free experience for UPI transactions tailored to their convenience,” said Rahul Jain, CFO, NTT DATA Payment Services India.

RBI is also looking to enhance the transaction limit for small value digital payments in off-line mode to Rs 500, within the overall limit for each payment instrument, to increase the speed of small value transactions.

At present, a limit of ₹200 per transaction and an overall limit of ₹2,000 per payment instrument has been prescribed for small value digital payments in offline mode including for National Common Mobility Card (NCMC) and UPI Lite.

“The overall limit is, however, retained at ₹2,000 to contain the risks associated with relaxation of two-factor authentication,” said the RBI.

”The average UPI transaction is below ₹2,000. Hence, the decision to enhance the transaction limits, particularly in offline mode, will undoubtedly amplify the adoption of digital payments among a larger segment of the population. This will fuel the growth of micro-transactions, transforming the way we perceive and utilise digital financial tools,” said Mandar Agashe, Founder and MD, Sarvatra Technologies.

On bilateral agreements for use of UPI internationally, the RBI said UPI linkage has been done with Singapore and has signed an MoU with UAE to link UPI with their IPP system, which should happen in the coming months.

Discussions are also underway with a few other countries for linkage of the payment systems, including some advanced economies such as Japan, but these are at preliminary stages, it said.

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