We missed this earlier: UPI’s Tap and Pay feature will go live from January 31, 2024, allowing users to pay by tapping their smartphone at supported merchants, the National Payments Corporation of India (NPCI) said in a circular dated December 19, 2023.
This mode of UPI payment will work in addition to the existing modes, such as scanning of QR code or inputting a UPI ID/phone number. It reduces the friction in payment as users do not have to scan any code or input any number, and, for low-value transactions, users also need not enter a UPI PIN.
Tap and Pay uses near-field communication (NFC) technology. NFC is a contactless payment method where you bring an NFC-enabled smartphone near an NFC-enabled payment terminal to initiate a transaction. Many mid- and upper-range smartphones support this feature. This feature works similarly to the Tap and Pay that most debit and credit cards support but cards require more expensive terminals, whereas UPI only requires the merchant to have a smart QR-code or an NFC-enabled tag to receive payments via Tap and Pay.
For transactions below the value of Rs 500 done with Tap and Pay, the user’s UPI Lite account will be debited, if enabled by the user. UPI Lite is an on-device wallet for small-value UPI transactions. You can read more about it here. This method does not require a PIN but NPCI recommends that apps require some other form of authentication such as a device passcode or biometric (fingerprint or face scan). Tap and Pay from UPI Lite can also work offline as the amount is debited from an on-device wallet.
For users who haven’t enabled UPI Lite or for transactions above the value of Rs 500, the user will have to input their UPI PIN while making a transaction with Tap and Pay.
It would be interesting to see if payment apps extend the UPI Tap and Pay facility to smartwatches and other wearables since many of these wearables support NFC. It would also be interesting to see how apps implement this feature on iOS as Apple limits the accessibility of iPhones’ NFC chip for payment, instead routing all NFC payments through Apple Pay.
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