India's digital payments ecosystem has been transformed drastically in last 3-4 years by NPCI-developed UPI, which brought ease of usage, safety and security along with real-time feature for users across India. Addition of many new features over time have enabled UPI to facilitate diverse payment needs of the Indian economy such as UPI-lite, which was launched in September last year.
Now, in a latest India's central bank, RBI (Reserve Bank of India) feels the need to utilize Artificial Intelligence (AI) in UPI, as the AI technology is being increasingly integrated into the digital economy. The Central Bank has proposed enabling 'Conversational AI' based Payments on UPI, which will enable users to engage in conversation with AI-powered systems to make payments.
This conversational AI based Payments, according to the RBI, holds immense potential in enhancing ease of use, and consequently reach, of the UPI system.
RBI, thus, proposed to launch an innovative payment mode viz., “Conversational Payments” on UPI, that will enable users to engage in a conversation with an AI-powered system to initiate and complete transactions in a safe and secure environment. 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 facility will, initially, be available in Hindi and English and will subsequently be made available in more Indian languages.
Speaking on introduction of 'Conversational payments' in UPI, Akash Sinha, CEO & Co-Founder, Cashfree Payments, said, "The Reserve Bank of India (RBI) has once again emphasised the significance of promoting digital payments in its latest Monetary Policy announcement. By proposing innovative concepts such as Conversational Payments and Offline capability on the Unified Payments Interface (UPI), the Central Bank is wholeheartedly advocating the integration of cutting-edge technologies like Artificial Intelligence (AI) and Near Field Communication (NFC) through 'UPI-Lite' on-device wallet, within the realm of payments.
"In a broader context, the Central Bank's concerted efforts to enhance the adoption and effectiveness of digital payments are fostering a robust and competitive environment for all stakeholders involved. Moreover, the ingenuity and progress achieved in India's digital payments landscape are poised to strengthen our global standing, particularly concerning UPI and digital payments. This collective advancement is set to elevate India's stature on the global stage, underscoring our nation's prowess and leadership in the realm of innovative payment solutions”, Sinha added.
Offline Payments in UPI using Near Field Communication (NFC) Technology
The RBI has also proposed to facilitate offline transaction using Near Field Communication (NFC) technology. This feature will not only enable retail digital payments in situations where internet / telecom connectivity is weak or not available, but will also ensure speed, with minimal transaction declines.NFC (Near field communication) is a method of wireless data transfer that detects and then enables technology in close proximity to communicate without the need for an internet connection. NFC is what makes tap-and-go services like Apple Pay, Android Pay and Amiibo work.
Enhancing transactions limits for small value digital payments
Moreover, the RBI has also prescribed a limit of ₹200 per transaction and an overall limit of ₹2000 per payment Instrument for small value digital payments in offline mode including for National Common Mobility Card (NCMC) and UPI Lite. By removing the need for two-factor authentication for small value transactions, these channels enable faster, reliable, and contactless mode of payments for everyday small value payments, transit payments etc.RBI said that there have been demands for enhancing these limits. To encourage wider adoption of this mode of payments and bring in more use cases into this mode, it is now proposed to increase the per transaction limit to ₹500. The overall limit is, however, retained at ₹2000 to contain the risks associated with relaxation of two-factor authentication. Instructions in this regard will be issued shortly.
NPCI (National Payments Corporation of India) is an umbrella organization under an initiative of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA), under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India. NPCI developed the entire UPI system and launched it in 2016 for public use.
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