Personal Finance

Use UPI to pay via feature phone, sans internet soon

The Reserve Bank of India (RBI) will be launching UPI based payment products for feature phone users for retail payments soon. This appears to imply that individuals will be able to make direct payments via UPI to other individuals via feature phones also. Currently UPI cannot be used to make payments via feature phones.

So far UPI has been working on smart phones with internet connection, however, a large number of people who have feature phones have been unable to carry out UPI transactions through using such phones. The RBI has now proposed to add a new feature to UPI which will enable such feature phone users to carry out payment transactions through USSD. These transactions can be carried out with text and without any need for the internet connection.

“In order to further deepen digital payments and make them more inclusive, ease transactions for consumers, facilitate greater participation of retail customers in various segments of financial markets and enhance the capacity of service providers, it is proposed to (i) launch UPI-based payment products for feature phone users, leveraging on innovative products from the RBI’s Regulatory Sandbox on Retail Payments; (ii) make the process flow for small value transactions simpler through a mechanism of ‘on-device’ wallet in UPI applications; and (iii) enhance the transaction limit for payments through UPI for the Retail Direct Scheme for investment in G-secs and Initial Public Offering (IPO) applications from Rs 2 lakh to Rs 5 lakh” said Shaktikanta Das, RBI Governor.

“India has a large mobile phone consumer base of about 118 crore mobile users (TRAI, October 2021)1 of which about 74 crore (Statista, July 2021) have smart phones indicating that there is a significant number of feature phone users in the country2. Feature phone users have limited access to innovative payment products. 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. To deepen financial penetration, it is important to bring feature phone users into the mainstream digital payments. 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 complimentary solutions, will facilitate UPI-based digital payment solutions on feature phones to promote wider digitisation. It is proposed to launch a UPI-based payment product for feature phone users. Further details will be announced shortly,” stated RBI’s Statement on Developmental and Regulatory Policies.

As UPI has become a critical part of the retail digital payment system in India the RBI has decided to add more features to enable people to carry out a wide range of transactions. UPI is the single largest retail payment system in the country in terms of volume of transactions, indicating its wide acceptance, particularly for small value payments.

Given the vast geography of India a good part of the country still offers very poor internet connectivity. This new text based feature will enable even smartphone users to make payments in the remotest part of the country. You just need a phone connectivity to do the transactions.

As Jan Dhan Accounts have significantly increased the penetration of bank accounts so it has potential to give last mile delivery digital payment transactions.


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