RBI to Launch AI-Based Conversational, Offline Payments on UPI By CIOTechOutlook Team

RBI to Launch AI-Based Conversational, Offline Payments on UPI

CIOTechOutlook Team | Friday, 11 August 2023, 04:16 IST

With the goal of harnessing new technologies to improve digital payments, the RBI has proposed enabling 'conversational payments' on UPI, which will allow users to make payments by conversing with AI-powered systems.

"Conversational instructions have enormous potential in improving ease of use and, as a result, the reach of the UPI system," said the RBI, adding that this channel will be made available in both smartphones and feature phone-based UPI channels, assisting in the country's digital penetration.

The service will initially be available in Hindi and English, with additional Indian languages to follow.

"AI-driven payments, which are essentially voice payments, are still in their infancy; adoption will be dependent on the establishment of uniform standards to facilitate interoperability among payment apps." "It will also enable voice assistants to initiate payments, thereby expanding the market for payment service providers and strengthening payments in the IOT space," said Ranadurjay Talukdar, Partner and Payments Sector Leader at Accenture.

The central bank also intends to introduce offline UPI payments via Near Field Communication (NFC) technology via the 'UPI-Lite' on-device wallet. UPI-Lite was introduced in September 2022 to help banks optimise processing resources and thus reduce transaction failures. It currently processes over 1 crore transactions per month.

"This feature will not only enable retail digital payments in situations where Internet / telecom connectivity is weak or unavailable, but it will also ensure speed with minimal transaction declines," the central bank explained.

“This move ensures swift transaction processing, solidifying NFC payments as a secure and user-friendly payment alternative. By leveraging this state-of-the-art technology, transaction volumes are set to witness a substantial increase, granting users a seamless, hassle-free experience for UPI transactions tailored to their convenience,” said Rahul Jain, CFO, NTT DATA Payment Services India.

To increase the speed of small value transactions, the RBI is also looking to increase the transaction limit for small value digital payments in off-line mode to Rs 500, within the overall limit for each payment instrument.

For small value digital payments in offline mode, a limit of 200 per transaction and an overall limit of 2,000 per payment instrument is currently prescribed, including for National Common Mobility Card (NCMC) and UPI Lite.

On bilateral agreements for use of UPI internationally, the RBI said UPI linkage has been done with Singapore and has signed an MoU with UAE to link UPI with their IPP system, which should happen in the coming months.

Discussions are also underway with a few other countries for linkage of the payment systems, including some advanced economies such as Japan, but these are at preliminary stages, it said.