Daily Current Affairs : 10-October-2024

The Reserve Bank of India (RBI) has recently introduced important changes to the Unified Payments Interface (UPI) systems, particularly UPI Lite and UPI123Pay, to encourage wider adoption and enhance user experience. These changes aim to make digital payments more accessible and convenient, especially for those who do not have access to smartphones or high-speed internet. Let’s look at the key updates in detail.

Key Changes Announced by RBI
  1. UPI Lite Wallet Limit Increase
    The UPI Lite wallet, which is designed for small and quick transactions, has seen a significant increase in both its wallet and per-transaction limits:
    • The wallet limit has been raised from ₹2,000 to ₹5,000.
    • The per-transaction limit has increased from ₹500 to ₹1,000.
  2. UPI123Pay Transaction Limit Raised
    UPI123Pay, a solution created for feature phone users without internet access, also benefits from a raised transaction limit:
    • The per-transaction limit for UPI123Pay has been increased from ₹5,000 to ₹10,000, allowing for larger value transactions.
  3. Beneficiary Account Name Look-up Facility
    A new feature is being introduced to improve payment security. The beneficiary account name look-up facility will be available for RTGS and NEFT transactions, much like the system already in place for UPI and IMPS transactions. This will help users confirm the recipient’s name before completing a transfer, reducing the risk of errors or fraud.
Understanding UPI Lite vs. UPI123Pay

While both UPI Lite and UPI123Pay are designed to make digital payments easier, they cater to different user needs and technologies. Here’s a breakdown of their differences:

  • Target Users:
    • UPI Lite: Primarily for smartphone users with internet access.
    • UPI123Pay: Designed for feature phone users without internet access.
  • Transaction Methods:
    • UPI Lite: Allows direct payment using stored funds on the device.
    • UPI123Pay: Offers multiple payment methods, such as IVR, missed call, app-based, and sound-based payments.
  • Transaction Limits:
    • UPI Lite: The per-transaction limit has been increased to ₹1,000.
    • UPI123Pay: The per-transaction limit has been raised to ₹10,000.
  • Technology Requirements:
    • UPI Lite: Requires internet for initial setup and usage.
    • UPI123Pay: Works without internet or smartphone, using basic mobile functions.
  • Use Cases:
    • UPI Lite: Best for small, everyday transactions that don’t require high-value payments.
    • UPI123Pay: Aims to provide digital financial inclusion to feature phone users in remote areas.

Important Points:

  • RBI’s recent changes to UPI systems aim to promote wider adoption and enhance user experience.
  • UPI Lite wallet limit increased from ₹2,000 to ₹5,000.
  • UPI Lite per-transaction limit raised from ₹500 to ₹1,000.
  • UPI123Pay transaction limit increased from ₹5,000 to ₹10,000 for higher-value transactions.
  • Beneficiary account name look-up facility to be introduced for RTGS and NEFT, improving transaction security.
Key Differences Between UPI Lite and UPI123Pay:
  • Target Users:
    • UPI Lite: Smartphone users with internet access.
    • UPI123Pay: Feature phone users without internet access.
  • Transaction Methods:
    • UPI Lite: Direct payment using stored funds on the device.
    • UPI123Pay: IVR, missed call, app-based, and sound-based payments.
  • Transaction Limits:
    • UPI Lite: Per-transaction limit increased to ₹1,000.
    • UPI123Pay: Per-transaction limit raised to ₹10,000.
  • Technology Requirements:
    • UPI Lite: Requires internet for setup and usage.
    • UPI123Pay: Works without internet, using basic mobile functions.
  • Use Cases:
    • UPI Lite: Ideal for small, everyday transactions.
    • UPI123Pay: Designed for digital financial inclusion among feature phone users.

Why In News

To encourage wider adoption of the Unified Payments Interface (UPI) and make digital payments more accessible, the Reserve Bank of India (RBI) on Thursday announced an increase in transaction limits on both UPI123 and UPI Lite, aiming to enhance user convenience and support higher-value transactions.

MCQs about Recent Changes to UPI Systems

  1. Which of the following is a key feature of UPI123Pay?
    A. Requires an internet connection
    B. Allows payments using stored funds on the device
    C. Works without internet or smartphone
    D. Limited to smartphone users
    Correct Answer: C. Works without internet or smartphone
    Explanation: UPI123Pay is designed for feature phone users who do not have access to the internet or smartphones. It allows payments through methods like IVR, missed call, and sound-based payments.
  2. What new feature will be introduced to enhance security for RTGS and NEFT transactions?
    A. UPI account linking
    B. Beneficiary account name look-up
    C. One-time password (OTP) for all payments
    D. Biometric verification
    Correct Answer: B. Beneficiary account name look-up
    Explanation: The RBI is introducing a beneficiary account name look-up feature for RTGS and NEFT transactions, similar to UPI and IMPS, to verify the recipient’s name before completing a payment and reduce the risk of errors or fraud.
  3. What is the primary goal of the RBI’s changes to UPI Lite and UPI123Pay?
    A. To increase interest rates on transactions
    B. To support higher-value transactions and digital financial inclusion
    C. To reduce the number of digital payment methods
    D. To limit digital payments to specific users
    Correct Answer: B. To support higher-value transactions and digital financial inclusion
    Explanation: The RBI’s changes aim to encourage wider adoption of UPI by raising transaction limits and enhancing security features, with the goal of making digital payments more accessible, especially for feature phone users and those in rural areas.

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