The Reserve Bank of India (RBI) on December 8 announced its intention to simplify the process flow for small value transactions over UPI.
UPI has emerged as the single largest retail payment system in the country in terms of volume of transactions (14 crore transactions per day in October 2021). One of the main objectives of UPI was to replace cash for low value transactions.
According to RBI statement on developmental and regulatory policies, transactions data analysis shows that 50 percent of transactions through UPI were below Rs 200 indicating its success.
However, these transactions end up utilising significant system capacity and resources at times leading to customer inconvenience due to transaction failures and issues related to connectivity.
The central bank has thus proposed to offer a simpler process flow by enabling small value transactions through an on-device wallet in UPI application which will conserve banks’ system resources, without any change in the transaction experience for the end-user.
