What Is UPI Lite and How to Use It

In September 2022, the RBI introduced “UPI Lite” in order to make small-value payments quick and easy. UPI’s usage in online payments is increasing with every passing month and year. India witnessed over7.82 billion worth of transactionsover UPI in December 2022 alone. However, small-ticket transactions are the bulk of UPI payments. So, to make small UPI transactions reliable and convenient without scope for payment failures, the NPCI has come up with an on-device wallet feature called UPI Lite. To learn what is UPI Lite and how to use it, go through our explainer. We have also explained the instructions to set up and use UPI Lite on your smartphone in this guide.

In this article, we have explained UPI Lite in simple terms and how you can use it to complete a low-value transaction without entering your UPI PIN. We have also compared UPI vs UPI Lite and discussed the benefits of both payment instruments.

What is UPI Lite?

What is UPI Lite?

UPI Lite is an on-device wallet meant for carrying outsmall-value payments under Rs 200without entering the UPI PIN. It has been devised by NPCI (National Payments Corporation of India) — the same body that looks after the development of UPI — to ease small-ticket payments in a quick and failproof manner. According to NPCI, close to 50% of UPI transactions are below Rs 200 and about 75% of the retail transactions are below Rs. 100.

Since the net size of low-volume transactions is so high, NPCI came up with a UPI wallet feature that can specifically cater to transactions below Rs 200 without putting a strain on the UPI infrastructure. So, even duringpeak load on UPI, UPI Lite will work seamlessly since it’s an on-device wallet and not entirely reliant on the UPI infrastructure.

The best part about UPI Lite is that you get all the features of UPI, minus the hassle of payment failures. It meansyou can scan and pay all UPI QR codesand send money to VPAs or UPI IDs, phone numbers, and bank accounts. However, you can only pay up to Rs 200 with UPI Lite. In addition, you have the option to add money to the wallet using UPI and store up to Rs 2000 in the wallet.

Apart from that, UPI Lite will ensure that your bank account statement does not get cluttered with small-value UPI transactions. All of your UPI Lite transactions will be available in the app you use.

One of the most hyped features of UPI Lite is theoffline payment mode. However, it seems the feature has not been released yet, either on BHIM or Paytm. There is also little information on how the offline payment method works, and NPCI’s website (visit) does not mention anything about offline payment mode, which is strange. If by offline mode, NPCI means payments through the*99# USSD code, then that is already available on UPI. Perhaps, we need to wait for more information on this subject from NPCI.

Key Features of UPI Lite

Key Features of UPI Lite

How Does UPI Lite Work?

UPI Lite works similarly tohow a wallet operates. Just activate UPI Lite in one of the supported apps and add money (up to Rs 2000) via your UPI account. Once the money is credited into the wallet, you can scan any QR code or enter a phone number and pay an amount below Rs 200 without requiring a PIN.

The money will be directly transferred to the user’s UPI account, and that’s the key difference between regular wallets and UPI Lite wallets. This is done toreduce the strain on banks’ CBS (Core Banking System)during peak UPI loads, which can be used for carrying out high-value transactions. Basically, with UPI Lite, the core banking has moved from banks to apps now.

UPI vs UPI Lite: What are the Differences?

Here are the key differences between UPI and UPI Lite.

Which Banks Support UPI Lite?

Unlike UPI which has support for over 250 banks, UPI Lite iscurrently available for only nine banksin India. The list of supported banks will expand in the future, but right now, the UPI Lite-supported banks are listed below:

UPI Lite Supported Payment Apps

Right now, there are only UPI Lite-supported apps available in India –BHIM and Paytm. But according to a recentreportbyEconomic Times, UPI Lite will be coming to PhonePe soon. A host of other payment apps are also working to bring support for UPI Lite.

How to Set up and Use UPI Lite in India

How to Use UPI Lite in Paytm

To set up and use UPI Lite, we have used Paytm to demonstrate the steps. Follow the below instructions and you will have UPI Lite ready to use within minutes.

  1. Install thePaytm app(Android:Free| iOS:Free) if you don’t have it on your smartphone.

  2. Next, open it and tap on “Balance and History (Passbook).” The new UPI Lite option will appear at the top. Tap on “Activate“.

  3. If you have aUPI Lite-supported bankadded to Paytm, select it and tap on “Next”.

  4. On the next page, enter a small amount and tap on “Add Money to UPI Lite“. Keep in mind, the money will be debited only via the supported UPI account, and you can add up to Rs 2,000. Now, enter the UPI PIN and UPI Lite will be activated immediately.

  5. Now,scan any QR code, and you can pay up to Rs. 200 via the UPI Lite wallet without requiring your UPI PIN.

How to Use UPI Lite on BHIM App

Apart from Paytm, we will also show you how to enable UPI Lite and load money into this wallet using the BHIM app. Here’s how it works:

  1. Open the BHIM app and scroll through the carousel at the top to find the UPI Lite feature. Click on “Enable Now” in the carousel.

  2. Now, you will be presented with information about the feature. Click on “Next” multiple times, then agree to the terms and conditions, and tap the “Enable Now” button at the bottom.

  3. Next, the BHIM app will ask you to load money into the wallet. As mentioned above, you can only add money from supported banks. So, input the amount, select the bank account, and tap on “Enable UPI Lite” to enter your UPI PIN. You will see a confirmation message for the same.

  4. Finally, you can head to your “Bank Accounts” section and see the UPI Lite wallet details here. Also, the BHIM app will show your UPI Lite balance at the top right on the home screen.

So this is our thorough explainer of what UPI Lite is and how to use it for making small-value payments. It’s a bit ironic that UPI replaced popular wallet solutions like Paytm and now, UPI has come up with a wallet solution itself in the form of UPI Lite. Anyway, that is all from us. If you want to understandwhat Digital Rupee isand what India’s new CBDC entails, go through our comprehensive explainer. And to find thebest UPI apps in India, head to our curated list. Finally, if you have any questions, let us know in the comment section below.

Arjun Sha

Passionate about Windows, ChromeOS, Android, security and privacy issues. Have a penchant to solve everyday computing problems.

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