RBI to have on-device wallets in UPI apps for small-ticket transactions

What is the news?

The Reserve Bank of India will soon launch UPI-based payment products for feature phones, and a new “on-device” wallet for small value UPI transactions.

Why RBI is launching UPI-based payment products for Feature Phones?

Feature phones are basic phones, which typically provide voice calling and text messaging functionalities.

Currently, there are no native UPI apps or features through which feature phone users can make UPI transactions. This is because UPI requires a smartphone with a working internet connection to send money.

The only way possible for featured phone users is through NUUP (National Unified USSD Platform). Here, users can dial *99# and make transactions through an interactive menu on their mobile phone. However, this method hasn’t picked up.

Hence, to make UPI transactions easier and more accessible to feature phone users, UPI-based payment products will be launched.

This move will increase digital penetration of financial services and help a large segment of people without access to smartphones or reliable internet services to transact digitally

Why RBI wants to launch an On-Device Wallet for small value UPI transactions?

RBI is also planning to launch an on-device wallet to help ease the flow of small value transactions through UPI. 

This is because 50% of the transactions through UPI were below Rs 200 and these transactions use up a lot of resources which often results in transaction failures. 

Hence, to simplify the process of small value transactions, an on-device wallet in the UPI app will be launched. The amount consumers can put in the wallet will be capped to around Rs 2000.

This is expected to work the same way as Paytm’s wallet, where you can add money from your bank account and transact through it.

Source: This post is based on the article “RBI to have on-device wallets in UPI apps for small-ticket transactions” published in Business Standard on 9th Dec 2021.