RBI announces to launch Digital Payment Systems for Feature Phones

On Wednesday, November 8, RBI Governor Shaktikanta Das has announced to launch digital payment systems for feature phones. In the upcoming days, the Reserve Bank of India (RBI) will allow Unified Payments Interface-based (UPI) products to be available on feature phones, and make an internet-free UPI payments system possible. The significant announcement is made by RBI while addressing the decisions made during the recently ended bi-monthly Monetary Policy Committee (MPC) meet. 

Measures proposed by the RBI governor Shaktikanta Das 

Shaktikanta Das stated, "UPI is the single largest retail payments systems in the country in terms of volume of transactions, indicating its wide acceptance — particularly for small value payments. 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 the financial markets and enhance the capacity of service providers, it is proposed to launch UPI-based payment products for feature phone users leveraging on the Reserve Bank’s regulatory Sandbox on Retail Payments." 

The RBI governor has proposed to make it a simple process flow for small value transactions with the help of an ‘on-device’ wallet mechanism in UPI applications. 

The RBI’s Statement on Developmental and Regulatory Policy reads, “Reserve Bank has been making efforts to facilitate greater participation of retail customers in financial markets, e.g. investment in the G-secs segment through the recent launch of Retail Direct Scheme, where UPI, in addition to other options such as internet banking, can be used to make payments for participating in both the primary and secondary markets. Over time, UPI has also become a popular payment option for Initial Public Offerings (IPOs) since its availability from January 01, 20194. It is reported that IPO applications of Rs 2 to Rs 5 lakh constitute approximately 10 per cent of subscription applications. The transaction limit in the UPI was enhanced from Rs 1 lakh to Rs 2 lakh in March 2020. To further encourage the use of UPI by retail investors, it is proposed to enhance the transaction limit for payments through UPI for retail Direct Scheme and IPO applications from Rs 2 lakh to Rs 5 lakh. Separate instructions to NPCI will be issued shortly."