NPCI Set to Launch NFC UPI Lite Offline Tap-and-Pay Transactions Up to INR 2,000
NPCI is also preparing to deploy NFC-enabled UPI Lite offline tap-and-pay transactions of up to INR 2,000 that would enable customers to make payments without internet connectivity on either the customer’s device or the merchant’s POS terminal.
India is working on a new feature for Unified Payments Interface (UPI) that will allow payments to be made without internet connectivity on the customer's device or the merchant's point-of-sale (PoS) terminal. That creates use cases like payments on aircraft and underground trains.
This year, National Payments Corporation of India (NPCI), the UPI operator, is expected to certify PoS devices of the country’s main merchant terminal manufacturers for offline UPI payments. Transactions are limited to INR 2,000, and customers can tap and pay at offline merchant terminals using the same near-field communication (NFC) technology that they are already used to from card-tap transactions.
How NFC’s UPI Lite will Operate?
Notably, NPCI has utilised NFC technology in the past. To facilitate offline transactions between two devices that are NFC-enabled, it released UPI Lite X in 2023. The feature that is now being worked on expands this to point-of-sale terminals, enabling retailers to finally take payments that do not require an internet connection.
Another anticipated benefit is that it should help close a last gap between the card networks and the real-time payments system. If users want to accept UPI in an offline context, they'll require a certification from NPCI, according to media sources. After they acquire their certification, they can build an app on top of it. One piece of hardware that can take a variety of digital payments is a point-of-sale terminal.
These include mobile wallets, prepaid payment instrument (PPI) cards, and traditional credit and debit cards. Reportedly, this is a use case for UPI apps that is driven by near-field communication (NFC). The software allows users to tap. Users can still pay up to INR 2,000 even when the terminal isn't online. The permission will be captured and sent for verification once the network is back up.
Additional Features of UPI Lite
Additionally, financial institutions and UPI third-party payment processors are constantly at work integrating the functionality into their native applications. Users can fund their UPI Lite wallet accounts on-device, allowing them to make transactions even when both their handset and the acceptance device aren't online. If NFC's tap-to-pay function works as advertised, customers won't have to enter their mobile PINs every time they make a purchase.
Since UPI did not provide the option of chip-based authorisation at the point of sale, this new feature fills a need that has previously been met by cards. Cards have traditionally enabled offline transactions. Due to operational concerns, several card issuers have limited the use of their cards aboard airlines. This presents a chance for UPI, in part because the initial transaction limitations are low. As an on-device digital wallet for PIN-less transactions, UPI Lite complements Lite X's offline payment capabilities. June saw a total of 22.71 billion transactions, valued at INR 22.02 trillion, processed by UPI.
