What is UPI Lite? How does UPI Lite Work?

10 MAY, 2024

The Indian digital financial sector is growing, and the Unified Payments Interface (UPI) is a simple and secure way to make digital transactions. The National Payment Corporation of India (NPCI) has introduced UPI Lite, aiming to make digital payments easy for people from all backgrounds. It provides a secure payment method with a user-friendly interface.

Keep reading to understand what UPI Lite is, its advantages, and how it works.

What is UPI Lite?

Unified Payments Interface Lite, or UPI Lite, is an extension of the UPI system designed especially for low-value transactions. These transactions do not require a PIN, resulting in faster online transfers of low-sum amounts.

Like every financial platform, UPI Lite has a limit. Before the UPI update, the maximum limit was Rs 200 per transaction. Later, it was increased to Rs 500 per transaction. You can add Rs 2,000 to your UPI Lite account twice daily, making a maximum cumulative value of Rs 4,000.

Why is UPI Lite Needed?

UPI was launched in April 2016 by the then Governor of RBI. It was a turning stone for digital payments. With its accessibility to everyone, UPI became the primary source of paying and receiving money online. Following this, UPI Lite was launched in September 2022 after carefully assessing the micro market transaction behaviour.

Everyone uses UPI to make transactions, whether big or small. However, while moving into local markets, the amount payable is comparatively low in value. While making low-value transactions, you can avoid the hassle of extra tasks by opting for UPI Lite. Here are some features of why UPI Lite is a much-needed initiative:

Accessibility: Empowers individuals from all backgrounds to participate in digital transactions, promoting financial inclusion across diverse demographics.
User-Friendly Interface: Features an intuitive and user-friendly interface, making it easier for users to navigate and perform transactions without facing unnecessary complexities.
Efficiency: Streamlines the digital payment experience, reducing transaction time and effort. This efficiency is beneficial for both consumers and businesses.

Apart from these, several other factors make UPI Lite needed for various purposes.

How to use UPI Lite?

Whether you’re a new user of UPI or an already existing user, it is easy to use UPI Lite with its easy-to-use and functional features. If you are a new user, start by installing a UPI-enabled mobile app and create an account. After this, follow these simple steps:

Open the UPI-Lite-enabled app
Choose the “pay now” option
Select the “UPI Lite” option
You can either enter the phone number or scan the QR code
Enter the amount ranging from Rs 1-500
Click on pay to make a successful transaction

What are the Advantages of UPI Lite?

UPI Lite has advantages which serve the needs of various users who rely on digital methods like UPI to make payments. Some of the benefits are

Real-time tracking: With real-time tracking of every transaction, you can be at ease, as it keeps you informed, resulting in transparency and clarity. The records are saved in the payment history section, where you can track all your financial activities.
Less time-consuming: With the no PIN required, like making contactless payments with credit cards up to Rs 5,000 without the PIN, you can save lots of time. Just scan and pay anywhere and anytime.
No limit transactions: There is no restriction on the number of daily transactions you may make using UPI Lite as long as the amount stays under the cumulative daily limit (Rs. 4,000).
Secure mode: UPI Lite is approved by RBI and NPCI. It has advanced security features, making it a reliable and convenient way to make transactions on a day-to-day basis. It has a device-binding feature where only one device is approved.

How Does UPI Lite Work?

UPI Lite works the same as any other UPI/payment app. After registering on the mobile app, you must link your bank account to start making payments. After the authentication is completed, you can add funds from your bank account. The working mechanism is easy. Here are a few things to keep in mind before proceeding:

A UPI Lite user can spend a maximum of Rs 2000 per day
A UPI Lite user can spend a maximum of Rs 500 per transaction
There is no transaction limit; users can make multiple transactions within the specified UPI Lite limits.

A user can add Rs 2,000 at once and spend it until the funds are exhausted, and if necessary, can add another Rs 2,000 to spend. It is a means of comfort for everyone who makes low-value transactions daily. It saves time by eliminating the need for passcodes or PINs.

By activating UPI Lite in payment applications that accept it, consumers can experience the benefits of digital payments without the inconvenience of traditional payment methods.

UPI vs UPI Lite: Top 6 Differences to Know

With their uniqueness, UPI and UPI Lite serve as crucial modes of payment in the financial world. Here’s a comparison between them to understand how and where to use them.

UPI	UPI Lite
The limit is Rs 1 Lakh per day and 20 transactions per day.	The Limit is Rs 4,000 per day and Rs 500 per transaction.
Extensive range of transaction methods like peer-to-peer transactions, bill payments, booking flights, and so much more.	Limited transaction services like fund transfers, nominal bill payments, and limited financial activities.
Variety of features catering to everyone's needs, resulting in a more complex user interface.	Limited features for regular and minimal use resulting in a more user-friendly interface.
Used across various platforms using third-party transactions, QR code scanning, etc.	Reduces the complexity and makes transactions easier with limited transaction options.
Accessible to everyone but its complex interface reduces its usage among some people.	Accessible to everyone and is preferable because of its quick-to-use nature.
Targets a broader audience because the services cater to both individuals and businesses.	Targets a demographic-based audience where minimal daily transactions are performed.

You are now familiar with the UPI and UPI Lite systems and their respective features. To conclude, UPI is appropriate if you regularly do high-value transactions. On the other hand, if you want to be quick and save time when finishing low-value transactions, UPI Lite is a better alternative because you do not need to input a PIN. Kotak offers UPI-enabled credit cards with attractive credit card offers and the ease of UPI payments.

Frequently Asked Questions:

What is the transaction limit for UPI Lite?

UPI Lite allows you to make transactions of up to Rs 500 per transaction and add up to Rs 4,000 to your UPI Lite account per day. However, the UPI Lite app can only handle up to Rs 2,000 at a time.

Which is better, UPI or UPI Lite?

Both UPI and UPI Lite have unique features. UPI is full of features, while UPI Lite is streamlined for simple functions. It is up to you and your requirements to decide which is best for you.