During the press conference of the monetary policy committee (MPC), Shaktikanta Das, the Governor of the Reserve Bank, unveiled several significant updates. While maintaining the lending rate at 6.50 percent, Das shared noteworthy developments concerning the unique payments interface (UPI) transactions in the country.
In his briefing for the monetary policy committee, Das revealed three major announcements:
- The RBI MPC introduced the concept of ‘conversational payments’ on UPI. In the near future, users will have the ability to engage in conversations with AI-powered systems while conducting payments.
“This avenue will be accessible on both smartphone and feature phone-based UPI platforms, thereby contributing to the increased adoption of digital services throughout the nation,” quoted PTI, citing the RBI governor’s statement.
The transaction limit for small-value digital payments in offline mode via UPI has been elevated from ₹200 to ₹500, while maintaining an overall cap of ₹2000 per payment instrument.
“The implementation of conversational payments through UPI signifies a substantial advancement. Users will be empowered to initiate and authorize transactions through natural language interactions, simplifying and enhancing the payment process,” explained Suren Goyal, a partner at RPS Group, to Hindustan Times.
- The RBI has introduced offline payments on UPI through ‘UPI-Lite’ utilizing Near Field Communication (NFC) technology within on-device wallets.
What is Near Field Communication (NFC)?
Near Field Communication is a short-range wireless technology facilitating swift and effortless data transfer between devices with a simple touch. Investopedia defines NFC as a technology that uses magnetic field induction to establish communication between devices when they come into contact.
NFC, widely known as such, provides several advantages, including improved operational efficiency for payment processors and heightened security compared to credit card payments. It grants users the flexibility to choose from various cards dynamically.
However, NFC does have limitations, such as its restricted range of just a few inches. Furthermore, it can restrict the usage of applications requiring sensitive data on smartphones.
- The third significant announcement pertains to the increase in the transaction limit for small-value digital payments in offline mode, going from ₹200 to ₹500, while maintaining an overall limit of ₹2000 per payment instrument.
“Nevertheless, the total limit of ₹2,000 is retained to mitigate the risks associated with relaxing two-factor authentication. Instructions regarding this adjustment will be issued shortly,” clarified the RBI governor.
