written by | January 27, 2022

Government Testing ‘UPI Lite’ for Payments without Internet

To make offline digital payments possible, the National Payments Corporation of India (NPCI) is testing a system under the United Payments Interface (UPI) called UPI Lite. This system will allow payments based on the UPI interface, used by apps like BHIM and Google Pay, and enable feature phone users or non-smartphone users to conduct payments directly from their bank accounts without using the internet.

Earlier, the Reserve Bank of India had announced a framework for digital payments of small amounts in offline mode or without using the internet. For long, digital payments were believed to be possible only with the use of fast-speed internet and smartphones limiting their use to only urban and affluent sections.

However, this may soon change with the introduction of UPI Lite. Here is what you need to know about the latest news related to offline digital payments.

How will Offline Payments work?

A VPA (Virtual Payment Address) or a UPI ID will be created through SMS, after which the payer has to choose the person or contact to whom the payment has to be made. The recipient should have a UPI ID as well, thereafter which the amount can be transferred to the recipient.

The NPCI is currently testing two methods, SIM overlay, and OTA, to make this solution a reality. Moreover, the RBI had released guidelines for offline transactions in digital mode including limits for payments and other factors, after undertaking pilot projects for the same.

What is SIM Overlay and OTA?

SIM overlays are extremely thin, self-adhesive microchips that are placed between the SIM card and the phone. The SIM card along with the overlay feature considerably increases the functionality of the phone. This technology is now being used in remote locations with little or no data availability.

SIM Card + overlay uses toll-free SMS communications to enable the user to conduct transactions without the internet in their feature phones. Feature phones are non-smartphones that do not have any internet connection. There are more than 500 million users of feature phones in the country living in semi-urban and rural areas.

OTA or Over-the-Air technology is a wireless technology that is used to communicate with a SIM Card, download applications to a SIM card, and manage a SIM card, without being physically connected to the card.

OTA enables a network operator to expand SIM services or change SIM contents from a distance quickly in a cost-effective way. Through OTA technology, it becomes possible to conduct data transfers or transactions wirelessly and have the solution delivered straight to the device’s firmware.


The ongoing pandemic has necessitated the use of contactless payments as social distancing and work-from-home have become the new normal. Such initiatives help in serving the unconnected and underserved segments of society that lack access to digitalization and banking services.

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