UPI joins the AI bandwagon, offline payments get a push

• RBI Governor Shaktikanta Das has announced the introduction of conversational payments on UPI.
• Conversational payment involves the use of AI to make payments easier.
• The central bank has also announced offline UPI payments using NFC end an increase in UPI Lite limit.

UPI (Unified Payments Interface) has made payments easier but the endeavour to simplify procedures is an ongoing process. Currently it involves QR code scanning, clicking and entering PIN for each transaction. Now, India's central bank is bringing in AI (artificial intelligence) to make it easier to pay with conversational UPI.

The Reserve Bank of India (RBI)’s Governor Shaktikanta Das made major announcements related to UPI at the Monetary Policy Committee (MPC) meeting.

The central bank held its third bi-monthly monetary policy meeting for FY24 on Thursday. At the meet, the governor announced the decisions of the committee.

UPI gets AI for conversational payments

UPI will soon get artificial intelligence (AI) as the central bank looks to make UPI transactions more interesting. Conversational payments will involve the users engaging in conversation with AI-powered systems to make payments.

“Conversational payments on UPI will enable users to engage in conversation with AI systems to make payments,” RBI governor Shaktikanta Das said at the meeting.

This has been done with an intention of “harnessing new technologies for enhancing the digital payments experience for users”.

While it is not exactly clear how conversational payments will work, the central bank will likely push for an AI chatbot like ChatGPT that will make it easier for users to make payments.

"This channel will be made available in both smartphones and feature phones-based UPI channels, thereby helping in the deepening of digital penetration in the country," the central bank said.

Offline UPI payments using NFC

Das has also announced the introduction of offline UPI payments using near field communication (NFC) technology through UPI Lite.

To recall, UPI Lite was introduced in September 2022 and allows users to use on-device wallets to make instant payments without the need of a UPI PIN.

The new announcement will make it easier for customers to make payments, as all you will have to do is tap your smartphone on the point-of-sale (PoS) machine to make the payment.

“To promote the use of UPI-Lite, it is proposed to facilitate offline transactions using NFC technology. This feature will not only enable retail digital payments in situations where internet or telecom connectivity is weak or not available, it will also ensure speed, with minimal transaction decline,” the MPC statement said.

Increase in UPI Lite limit

The central bank has also announced an increase in the limit of UPI Lite transactions from the existing ₹200 per transaction to ₹500 per transaction.

However, the bank continues to restrict the overall limit per instrument to ₹2,000.

Experts welcome move

Experts have welcomed the central bank’s move towards conversational payments and push for offline UPI.

“Offline payments in UPI will add to the customer convenience and on the other hand, facilitating conversational payments on UPI through artificial intelligence is a futuristic move and will have a transformative impact on digital payments,” said Aditya Damani, founder & CEO, Credit Fair.

“The RBI Governor's announcement today regarding the introduction of conversational payments and offline functionality in UPI Lite marks a pivotal step that is set to reshape India's economic trajectory. These advancements hold the potential to revolutionise the digital payment ecosystem and drive financial inclusion to new heights,” said Rajsri Rengan, India Head of Development, Banking and Payments, at FIS.

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