PhonePe rolled out the UPI (Unified Payments Interface) Lite payments feature in its app to offer faster payments for smaller transactions two months after its biggest rival, Paytm, used the platform.
The new feature will allow users to initiate small payments of up to Rs 200 with a single tap from their UPI Lite account without entering a PIN, the Walmart-backed payments decacorn said in a statement on May 3.
SoftBank-backed Paytm went live with UPI Lite in the last week of February.
With UPI Lite, the transaction is debited directly from the UPI Lite balance on the device without involving the core banking system of the customer’s bank (remittance bank) in real-time, making the transaction more seamless and even faster than regular UPI transactions, while also increasing corporate interpretation The probability of success of the transaction.
UPI Lite on PhonePe is supported by all major banks and accepted by all UPI merchants and QR codes nationwide, the company said but did not specify which banks would support it. UPI Lite on Paytm is reportedly backed by nine banks, including Canara Bank, Central Bank of India, HDFC Bank, Bank of India, Kotak Mahindra Bank, Punjab National Bank, State Bank of India, Union Bank of India and Utkarsh Small Finance.
PhonePe said users could instantly activate the UPI feature on their PhonePe app and create a UPI Lite account through a simple process that doesn’t involve any KYC (know your customer) authentication. Additionally, users can load up to Rs 2,000 in their Lite account and make transactions of up to Rs 200 or less at a time, the company said.
To view transaction history, users will receive a daily SMS with the history of UPI Lite transactions made by the bank for that day. The company added that it also clutters bank statements and passbooks with small transactions, as transactions will only be visible in Lite accounts, not bank statements.
“UPI Lite is a core part of the UPI stack of products with the vision to enhance users’ digital payment experience for frequent and low-value spending. Small ticket transactions make up a large portion of UPI’s total payment volume, and UPI LITE will make them faster and more convenient without straining the existing UPI infrastructure,” said Rahul Chari, PhonePe co-founder and CTO.
“UPI Lite also paves the way for the introduction of use cases where payments need to be performed without a network connection, making it one of the most exciting recent launches by NPCI. This is key to increasing the adoption of digital payments among users in India step to strengthen the cashless economy further,” he added.
PhonePe’s launch of UPI Lite comes on the heels of a massive $1 billion fundraising campaign announced in January. The company has raised $750 million from investors, including GIC, Walmart, Tiger Global, TVS Capital and Ribbit Capital. The payments startup, which became India’s most valuable fintech company with the funding, is also preparing to launch digital lending on its platform.
UPI Lite quickly became popular among users, especially for small transactions. In April, Paytm said it reached a new milestone of 4.3 million users on UPI Lite, according to media reports. On the other hand, UPI hit a new high with 8.9 billion transactions in April.