RBI has proposed to launch UPI-based payment products for feature phone users. Governor Shaktikanta Das also announced to enhance the transaction limit for payments through UPI for the Retail Direct Scheme from Rs. 2 lakh to Rs. 5 lakh. As we know, feature phones are basic phones, which typically provide voice calling and text messaging functionalities. Although it does have basic multimedia and internet options.

In the past couple of years, Unified Payments Interface (UPI) has emerged as a popular mode of payment through smartphones. India has a large mobile phone consumer base of about 118 crore users (TRAI, October 2021). In this, a significant number of users are still on feature phones. But feature phone users have limited access to innovative payment products. Although these phones have NUUP (National Unified USSD Platform) as an option for availing basic payment services using the shortcode of *99#, the same has not picked up.

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“UPI is the single largest retail payment system in the country in terms of volume of transactions (14 crore transactions per day, October 2021). One of the initial objectives of UPI was to replace cash for low value transactions. Transaction data analysis shows that 50 per cent of transactions through UPI were below Rs. 200, indicating its success. These low value transactions, however, utilise significant system capacity and resources. At times leading to customer inconvenience due to transaction failures because of issues related to connectivity.”

RBI in a statement

On-Device Wallet For Small Value Transactions

In order to further deepen digital payments and make them more inclusive, it has it is proposed to:

(1) launch UPI-based payment products for feature phone users, leveraging on innovative products from the RBI’s Regulatory Sandbox on Retail Payments;

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(2) make the process flow for small value transactions simpler through a mechanism of ‘on-device’ wallet in UPI applications; and

(3) enhance the transaction limit for payments through UPI for the Retail Direct Scheme for investment in G-secs and Initial Public Offering (IPO) applications from Rs. 2 lakh to Rs. 5 lakh.

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All of this aims to ease transactions for consumers, facilitate greater participation of retail customers in various segments of financial markets and enhance the capacity of service providers. Governer Das also proposed to release a discussion paper on various charges in the payment system to have a holistic view of the issues involved and possible approaches to mitigating the concerns so as to make digital transactions more affordable.