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UPI Lite launched: What is it and how to setup and use it?

Source: India Today Feb-24-2023 3 min read

The Reserve Bank of India launched UPI Lite last year to ease the digital payments experience. The feature allows users to initiate low-value transactions directly from a digital wallet without entering their UPI PIN.

By Divya Bhati: Paytm recently launched the UPI Lite payments option on its platform. The feature is enabled by the National Payments Corporation of India to help people carry multiple small-value UPI transactions instantly and enhance their digital payments experience.

The UPI Lite was launched in September 2022 by the Reserve bank of India to ease the UPI transaction process. According to the NPCI circular issued in May 2022, 50 per cent of the total UPI transactions around the country are of the value of Rs 200 and less. However, even with a low value of transactions, the UPI system gets overwhelmed, increasing the transaction traffic across banks, and also many times payments get stuck. Additionally, UPI also takes time as users have to add pins and wait for the bank to initiate payments.

So to initiate instant payments and lessen the traffic across banks, the UPI Lite was introduced. While the BHIM app has already started allowing UPI Lite transactions, recently Paytm became one of the first digital payments apps to start UPI Lite on its platform.

Let's take a detailed look at what UPI Lite is and how to set it up on Paytm.

What is UPI Lite?
UPI Lite allows users to conduct transactions using an 'on-device' wallet and not from a linked bank account. This means users will have to add money to the platform, in the case of Paytm in Paytm wallet to initiate transactions using UPI Lite.

Once the feature is set up, the UPI Lite wallet allows a user to do instant transactions of up to Rs 200, instantly without adding UPI PIN or wait for banks to confirm transactions. Notably, users can add a maximum of Rs 2,000 can twice a day to UPI Lite, making the cumulative daily usage up to Rs 4,000.

Additionally, with UPI Lite, users can carry out multiple small-value UPI payments without worrying about the daily UPI transaction cap on the number of bank transactions. This way, UPI Lite makes it easier to make low-value UPI transactions. Along with that users can also transfer UPI balance back to the same bank account anytime, without any charges.

How to set up UPI Lite in Paytm
To set up UPI Lite in Paytm:

- Open the Paytm app on your iOS or Android smartphone.

- Tap on the "Profile" button located at the top left corner of the home page.

- Select "UPI & Payment Settings" and then choose "UPI Lite" under the "Other Settings" section.

- Select the bank account that is eligible for UPI Lite and specify the amount you wish to add to your UPI Lite account on the "Add Money to Activate UPI Lite" page.

- Now validate your MPIN and complete the process to create your UPI Lite account.

Once your account is created, you can make payments with just a single tap.

It is worth noting that UPI Lite also helps in decluttering bank passbooks with small-value transactions, as these transactions would only be visible in the Paytm balance and history section, and not in the bank passbook.