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Some innovators had demonstrated their solutions for feature phone payments under RBI ‘s Regulatory Sandbox

RBI has also raised the transaction limit for IPO applications related payments through UPI to INR 5 lakh

In November, UPI transactions had crossed the $100 Bn value mark for the first time

In a bid to widen the reach of digital payments in the country, the Reserve Bank of India (RBI) has proposed to introduce UPI payments services for feature phone users.

In its statement on developmental and regulatory policies released post the meeting of its Monetary Policy Committee, RBI said further details on the proposal will be announced shortly.

It said that in the first cohort of RBI Regulatory Sandbox, some innovators had successfully demonstrated their solutions for feature phone payments, under the theme of ‘Retail Payments’. 

“These products, coupled with other complementary solutions, will facilitate UPI-based digital payment solutions on feature phones to promote wider digitisation,” it said.

Observing that about 74 Cr mobile phone users have smartphones in the country out of the total 118 mobile users, RBI noted that there is a significant number of feature phone users in the country who can be provided easier digital payments options.

Although feature phones have NUUP (National Unified USSD Platform) as an option for availing basic payment services using the short code of *99#, the same has not picked up, it said. 

“To deepen financial penetration, it is important to bring feature phone users into the mainstream digital payments,” the central bank said.

Further, RBI noted that around 50% transactions through UPI were below INR 200 and these low value transactions, utilise significant system capacity and resources, at times leading to customer inconvenience due to transaction failures because of issues related to connectivity.

In a bid to ease the process of small value transactions, RBI has proposed to offer a simpler process for these transactions through an “on-device” wallet in UPI app which will conserve banks’ system resources, without any change in the transaction experience for the user.

Further, with the increasing use of UPI for investments including initial public offering (IPO) it has also proposed to enhance the transaction limit for payments through UPI for retail direct scheme and IPO applications from INR 2 lakh to INR 5 lakh.

Robust Growth In UPI Transactions

In November, UPI transactions had crossed the $100 Bn value mark for the first time. With 418 Cr transactions worth INR 7.68 Lakh Cr (approx $102.4 Bn) in November, UPI has maintained the milestone, with a tepid fall from October 2021.

According to NPCI data, October 2021 had recorded 421 Cr transactions worth INR 7.71 Lakh Cr (approx $103 Bn), a rise of 15.3% month-on-month (MoM), a major of which could be attributed to the festive season. Meanwhile, in November, NPCI posted a fall of 0.39% in UPI value and 0.71% in transaction count.