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May 13, 2024

Paytm Embraces UPI Lite Wallet Following RBI’s Payments Bank Crackdown

In response to the Reserve Bank of India’s (RBI) crackdown on its payments bank, One97 Communications, the parent company of Paytm, is shifting its focus towards the Unified Payments Interface (UPI) Lite wallet. This strategic move aims to cater to users who prefer the convenience of low-value transactions.

The RBI’s actions earlier this year led to restrictions on Paytm Payments Bank, preventing it from accepting fresh credits in its mobile wallets after March 15. In light of these developments, Paytm is emphasizing the UPI Lite feature as a solution for users seeking seamless transactions.

According to a spokesperson from Paytm, the wallet remains an essential tool for everyday payments, offering users the ability to keep funds readily available for quick and convenient transactions. Paytm’s UPI Lite enhances this experience, facilitating faster transactions at local stores, with street vendors, and for regular purchases, while maintaining clear bank statements.

Unlike Paytm’s conventional wallet operations, UPI Lite specializes in processing low-value transactions, typically set at below Rs 500, as defined by the National Payments Corporation of India (NPCI). This feature is particularly beneficial for small-ticket transactions such as grocery purchases and commute fares.

Users of the UPI Lite feature can add up to Rs 2,000 to their wallet twice a day, reaching a total daily capacity of Rs 4,000, without the need for a PIN. This native wallet solution is integrated within fintech applications like Paytm, ensuring seamless transactions within their ecosystem.

Several other major fintech players, including PhonePe, Google Pay, Navi, and Groww, offer the UPI Lite solution to users. Launched in September 2022, UPI Lite operates within the existing UPI ecosystem protocols for mobile phones, ensuring compliance and system acceptance.

However, not all banks support the UPI Lite feature. On Paytm, UPI Lite is only supported by select banks including Canara Bank, Central Bank of India, HDFC Bank, Indian Bank, Kotak Mahindra Bank, Punjab National Bank, State Bank of India, and Axis Bank. Currently, 34 banks are live with the UPI Lite feature, as per the NPCI website.

Last month, the NPCI granted permission to Paytm to commence user migration to a new payment service provider (PSP) under the bank’s purview. This development followed NPCI’s decision to allow Paytm to operate as a third-party application provider (TPAP) on the UPI in March. Notably, State Bank of India (SBI), Axis Bank, HDFC Bank, and YES Bank act as PSPs to Paytm.

In conclusion, Paytm’s shift towards the UPI Lite wallet underscores its commitment to adapt to regulatory changes and cater to evolving user preferences in the digital payments landscape. With a focus on simplicity, convenience, and compliance, the UPI Lite wallet is poised to offer users a seamless payment experience for their everyday transactions.

Jhumpa Lahiri

Jhumpa Lahiri

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