UPI Lite X & NFC: India's Payment Evolution

  Sep 14, 2023

UPI Lite X,Offline Payments and the Near Field Communications Technology


Launch of UPI Lite X for offline transactions by the National Payments Corporation of India (NPCI).
Aims to address a market that encompasses personal consumption expenditures not spent digitally, estimated at $2 trillion.
Enhancements in technology and the 5G rollout are poised to foster the digital payments ecosystem.

Historical Context

Digital transactions witnessed single-digit growth before 2010.
Demonetization and the pandemic have boosted digital transactions; from 28% growth between 2010 and 2016 to 56% in 2017.
By 2025, the revenue pool for payment players is projected to reach 2,937 billion INR, a significant increase from 1,982 billion INR in 2020.

Offline Connectivity through UPI Lite X

UPI Lite X leverages near-field communication (NFC) to facilitate transactions for offline merchants using Point-of-Sale (PoS) devices.
Enables NPCI to compete with Visa and MasterCard in the contactless payment sector.
RBI has permitted offline payments through cards, wallets, and mobile devices with transaction limits updated.

Technological Innovations

Technology companies like ToneTag are developing solutions to enable offline transactions without internet, NFC, or even smartphone literacy.
ToneTag leverages sound-wave communication technology to facilitate data transfer for transactions.

Real-World Impact

The National Common Mobility Card (NCMC) facilitates both offline mobility payments and online transactions. Enhanced mass-transit experiences lead to reduced use ,of private vehicles and lower carbon footprints.

Cash Versus Digital Dynamics

Despite the growth of digital payments, cash still dominates with a considerable share in e-commerce and regular transactions.
E-commerce sees a high dependency on Cash-on-Delivery (CoD) payments, especially in Tier-II and Tier-IV regions.
While UPI transactions are hitting records, cash-in-circulation remains substantial, posing a challenge to the transition to a digital economy.

Industry Perspectives and Concerns

The sustainability and revenue streams of offline payments remain a point of discussion, considering the investments by big players like Paytm, Google Pay, and others.
Concerns regarding network outages and the readiness to handle them with reduced cash circulations.
The new risk pool opportunities emerging from potential system outages, such as digital fraud insurance, are gaining attention.


New products like UPI Lite X and NFC-enabled Tap & Pay aim to include every segment of the ecosystem.
The industry is witnessing a new phase of financial inclusion in India, with several strategic factors at play.
The future seems promising, albeit with challenges, as India steps into the next orbit of financial inclusion with the advent of offline payment technologies.

Near-field Communication (NFC)

NFC is rapidly gaining traction in India, fostering a contactless transaction environment amidst a digital transformation. Leveraged by the National Payments Corporation of India (NPCI) in its recent UPI Lite X offering, NFC enables swift, offline transactions through a simple tap, even on point-of-sale (PoS) devices. This technology has opened up avenues for the RBI to enhance the transaction limit, thereby boosting the user experience and expanding the digital payments ecosystem. Furthermore, it has positioned NPCI as a formidable contender against giants like Visa and MasterCard in the contactless payment space. As NFC permeates the Indian market, it signifies a step towards greater financial inclusivity and a modernized payment infrastructure, responding aptly to the connectivity issues that have long plagued remote regions.


Get a call back

Fill the below form to get free counselling for UPSC Civil Services exam preparation


Enhancing India’s Dairy Sector through Amul’s Global Growth
Snakebite Management and Awareness in India
Snow Leopard Population Assessment in India (SPAI)
Hydrogen in Heavy Industries
Ice Stupas in Ladakh
Women-led Farmer Producer Organizations (FPOs)
Public Examinations (Prevention of Unfair Means) Bill, 2024
Indo-Bangla Tangail Sari GI Tags
Consumption Data and Disparity in India
India’s Household Consumption Expenditure Data
Lichens: Effective Tools for Environmental Monitoring
Pollinators and Their Importance
Placers: A Comprehensive Understanding
Rare Earth Elements Mining in India
ISRO’s PAPA: A Milestone in Understanding Solar Phenomena