The Reserve Bank of India has said it is exploring the use of AI-powered instant payments as part of its continued reform of payments systems within the country.

In a statement outlining new developmental and regulatory policies the central bank said it intends to use the language abilities of artificial intelligence to introduce “Conversational Payments” in UPI, building on a system that has transformed the digital payment landscape in India.

“It is, therefore, proposed to launch an innovative payment mode viz., “Conversational Payments” on UPI, that will enable users to engage in a conversation with an AI-powered system to initiate and complete transactions in a safe and secure environment,” Yogesh Dayal, RBI’s Chief General Manager said.

He added that it will be made available in both smartphones and feature phones-based UPI channels, further improving digital penetration in the country. Under the proposal, the solution will initially be available in Hindi and English before being made available in more Indian languages.

Offline payments in UPI

In addition, a proposal has been put forward to promote the use of UPI-Lite by facilitating offline transactions using Near Field Communication (NFC) technology.

“UPI-Lite” is an on-device wallet that was launched in September 2022 to increase the speed of small value transactions on UPI, in turn optimising processing resources for banks and reducing transaction failures. According to RBI, the product currently processes more than ten million transactions a month.

The new offline feature is expected to not only enable retail digital payments in situations where internet connectivity is weak or not available, but also ensure speed, with minimal transaction declines.

Enhancing transaction limits for small value digital payments

Meanwhile, RBI has also proposed enhancing transactions limits for small value digital payments. A limit of ₹200 per transaction and an overall limit of ₹2000 per payment instrument has been prescribed by the Reserve Bank for small value digital payments in offline mode including for National Common Mobility Card (NCMC) and UPI Lite.

To encourage wider adoption of small value, contactless payments it has been proposed to increase the per transaction limit to ₹500. The overall limit is, however, will remain at ₹2000 to deal with any risks that comewith the relaxation of two-factor authentication.”

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