The Reserve Bank of India is using innovative fintech developments to strengthen the country’s UPI payment system with AI-powered “conversational” payments

The Reserve Bank of India (RBI) has announced the soon-to-come use of artificial intelligence (AI) tools for making Unified Payments Interface (UPI) conversational payments.

Conversational payments can be initiated and processed during a chat or a messaging conversation with an AI bot. Such an AI-powered system will be made available in both smartphone and feature phone-based UPI channels, initially in Hindi and English. Subsequently, more Indian languages ?would be added to the new tool’s interface.

Except for that, UPI is expected to get more features, including NFC-enabled offline payments on UPI through ‘UPI-Lite’ on-device wallet. UPI-Lite was launched last year to increase the speed of small value transactions. The device currently processes more than ten million transactions monthly.

In addition, RBI plans to enhance the transaction limit for small value digital payments in offline mode from Rs 200 to Rs 500 within the overall limit of Rs 2000 per payment instrument. This way, more payment volumes would be processed in a quicker and more convenient way.

Although the operational specifics of the AI-empowered conversational payments have not been disclosed yet, experts believe that they will be facilitated through some kind of chatbot or smart virtual assistant, possibly providing the user with a direct payment link or QR code.

The move can potentially facilitate retail trade and boost conversion rates, as even those consumers who are not tech-savvy enough to navigate payment apps will be able to make mobile payments with the AI bot assistance.

Since 2020, the RBI has been working to implement a fully interoperable QR code infrastructure nationwide. The efforts to standardize and improve interoperable QR codes were expected to reinforce the acceptance infrastructure, provide better user convenience, and enhance system efficiency.

Today, many organizations and service providers are experimenting with QR code bill payment systems, allowing bill payments without visiting any online portal or physically going to a payment centre.

RBI is continuing to innovate the national financial system, also piloting digitalisation of Kisan Credit Card loans, with streamlined flow of required digital information to lenders through open APIs.