FinTechUPI Lite and UPI 2.0: Revolutionizing Digital Transactions in India

INTRODUCTION

India’s digital payment landscape has undergone a remarkable transformation with the advent of the Unified Payments Interface (“UPI”), a revolutionary system introduced by the National Payments Corporation of India (“NPCI”). UPI has simplified digital transactions by enabling seamless money transfers through smartphones, making cashless payments more accessible to millions of Indians. Building on this success, the introduction of UPI 2.0 and UPI Lite has further enhanced the capabilities of this platform, offering users new features and conveniences.

UPI 2.0 brought significant advancements, such as the ability to link overdraft accounts, set mandates for recurring payments, and view invoices within the payment application. These enhancements have made UPI not just a tool for peer-to-peer transfers but a comprehensive solution for a wide range of financial transactions.

UPI Lite is another innovative step, designed to cater to the needs of smaller transactions by providing an offline payment mode that ensures quick and secure payments without the need for an internet connection. This feature is particularly beneficial in areas with limited connectivity, further expanding the reach of digital payments across the country.

Together, UPI 2.0 and UPI Lite represent a significant leap forward in India’s journey towards a cashless economy, offering users more flexibility, security, and convenience in their everyday financial activities.

UPI LITE AND THE DIFFERENCE BETWEEN UPI AND UPI LITE

UPI Lite is a simplified version of UPI system in India, the concept of UPI Lite is introduced to facilitate small-value transactions. The fund can be added from any of your linked bank account. The fund will be separated from your linked bank account as UPI Lite wallet.
Under UPI Lite service, users are permitted to conduct transactions of up to Rs 500/- per transaction. However, the cumulative daily addition of funds to the UPI Lite account is capped at Rs. 4000/-. It is imperative to note that UPI Lite application has a maximum capacity to hold Rs. 2000 at any given time.

TERMS AND CONDITIONS OF UPI LITE

a) Transaction Limits: With UPI Lite, users can make real-time transactions of up to Rs. 500 per transaction. The maximum amount that can be held in the UPI Lite account at any given time is Rs. 2,000. However, users have the option to add funds to their UPI Lite account twice a day, with each addition capped at Rs. 2,000, thereby enabling a maximum daily usage limit of Rs. 4,000.

b) Fund Credit: Funds utilized through UPI Lite transactions are directly transferred to the user’s linked bank account for credit and refunds.

c) Transaction History: Funds utilized through UPI Lite transactions are directly transferred to the user’s linked bank account for credit and refunds.

d) User Responsibility: The UPI Lite service is intended for personal use only and should not be utilized for illegal or fraudulent activities. Any misuse of the UPI Lite service may result in suspension or termination of the account without prior notice.

Difference between UPI and UPI Lite

UPI 2.0
UPI 2.0 redefines the user experience within the UPI framework through its extensive array of features, encompassing an overdraft facility, one-time mandate capability, invoicing functionality, signed intent mechanism, and QR facilities. The primary objective of UPI 2.0 is to advance financial inclusivity nationwide by harnessing the advantages inherent in its feature set.

FEATURES OF UPI 2.0

a) Overdraft Facility
The NPCI has declared that UPI 2.0 will permit customers to associate their overdraft accounts with the UPI. This arrangement enables users to effect immediate transactions from their overdraft accounts and avail themselves of all attendant benefits. By integrating overdraft accounts into UPI 2.0, NPCI seeks to furnish supplementary digital services through which users can conveniently access and administer their overdraft facilities.

b) One-Time Mandate
UPI 2.0 introduces a feature known as the one-time mandate facility, enabling customers to pre-authorize transactions for subsequent payment. At the time of the actual purchase, the designated amount will be debited from the customer’s account and received by the respective merchant or individual user. As per the NPCI, the creation and implementation of the mandate can be promptly executed, ensuring a smooth process, while merchants will receive the funds on the purchase date.

c) Invoicing
The inclusion of invoices within UPI 2.0 constitutes a significant feature. This feature enables customers to scrutinize the invoice provided by the merchant prior to initiating payment. Customers can meticulously review the amount and other pertinent details delineated in the invoice before proceeding with the transaction. This functionality serves to ensure that customers have the opportunity to authenticate and confirm the invoice before finalizing the transaction, thereby augmenting transparency and bolstering confidence in the payment process.

d) Signed Intent and QR
Signed intent and QR facilities empower customers to authenticate the legitimacy of merchants when scanning QR codes. Users are furnished with pertinent information aiding in the determination of whether the merchant is a validated UPI merchant. This supplementary security measure fortifies the integrity of QR codes and transaction intent. Implementation of this feature expedites transaction processing, as it obviates the necessity to input the application passcode for signed intent.

AMLEGALS REMARKS

The advancements in UPI, including UPI Lite and UPI 2.0, have revolutionized digital payments in India, making transactions more accessible, secure, and efficient. UPI Lite caters to small-value transactions with simplified processes, while UPI 2.0 introduces sophisticated features like overdraft facilities, invoicing, and enhanced QR code security.

These innovations not only enhance user convenience but also promote financial inclusivity, reinforcing UPI’s pivotal role in India’s rapidly evolving digital economy. Together, they exemplify the nation’s commitment to creating a robust and inclusive digital payment ecosystem.

– Team AMLEGALS assisted by Mr. Samarth Sheth (Intern)