As per the RBI statement, low value transactions use up significant system capacity and resources, at times causing inconvenience to customers due to failure of transactions due to connectivity-related issues. “Therefore, the UPI app is proposed to offer a simplified process flow by enabling small value transactions through “on-device” wallets that conserve system resources of banks without any change in the transaction experience for the user. Will do”, says the statement.
“UPI is the biggest retailer” payment System in the country in terms of transaction volume (14 crore transactions per day, October 2021)3. One of the early purposes of UPI was to replace cash for low value transactions. Transaction data analysis shows that 50 per cent of transactions through UPI were less than Rs 200, indicating its success,” said RBI’s statement on development and regulatory policies issued on December 08, 2021.
Many people also use UPI as a means to make small payments. This means that the bank account details of UPI users get cluttered if payments are being debited directly from their bank accounts. This is due to the high number of small value payments that make it difficult to analyze your bank account details. With the announcement of On-Device UPI Wallet, you will not need to deal with long bank statements mainly due to high number of UPI transactions.
This new wallet will enable you to segregate your small value UPI transactions from your bank account. All you need to do is load your wallet with a large amount from your bank account and then make small payments through this wallet. These small transactions will only be visible in your wallet history and will not be part of your bank account details.