The National Payments Corporation of India (NPCI) has announced a significant update for UPI Lite users. It has directed issuer banks, payment service provider (PSP) banks, and platforms offering UPI Lite to enable a “transfer out” feature by March 31, 2025. This new feature will allow users to withdraw their UPI Lite balance and transfer it back to their bank account without disabling the service.
What is UPI Lite?
UPI Lite is a simplified digital payment service that allows users to make low-value transactions (below ₹500) without entering a UPI PIN. This service is designed to enable quick and seamless payments for small transactions like grocery shopping, public transport fares, and local purchases. However, until now, users could only add funds to their UPI Lite wallet but could not withdraw them directly. The only way to access the balance was by disabling UPI Lite, which would transfer the remaining funds back to the linked bank account.
Key Changes in UPI Lite
- Introduction of the “Transfer Out” Feature
- Users will now be able to withdraw money from their UPI Lite balance and send it back to their linked bank account.
- There will be no need to disable UPI Lite to access funds.
- Improved Transaction Reconciliation
- Issuer banks must maintain a Lite Reference Number (LRN) level balance to ensure accurate transaction records.
- Daily reconciliation with NPCI data will be mandatory for all banks operating UPI Lite.
- Enhanced Security Measures
- UPI apps with active UPI Lite must have additional security features like:
- App passcode
- Biometric authentication (fingerprint or facial recognition)
- Pattern-based lock at login
- This move aims to prevent unauthorized access and improve user security.
- UPI apps with active UPI Lite must have additional security features like:
How to Activate UPI Lite?
Users can enable UPI Lite on their banking app by following these simple steps:
- Open the UPI app on your smartphone.
- Look for the option to enable UPI Lite on the home screen.
- Read and accept the terms & conditions to proceed.
- Enter the amount you want to add to UPI Lite.
- Select the linked bank account for the transaction.
- Authenticate using your UPI PIN to complete the setup.
Once activated, UPI Lite will allow users to make quick, small-value payments without needing a UPI PIN for each transaction.
Implementation Deadline
NPCI has instructed all banks and payment platforms to implement these changes by March 2025. The existing guidelines for UPI Lite will remain unchanged, except for the newly introduced modifications. This update is expected to enhance user convenience and make UPI Lite a more flexible and user-friendly digital payment option.
