The Reserve Bank of India (RBI) is the latest stakeholder in the financial industry to look at how artificial intelligence (AI) can transform financial services delivery. The apex monetary authority today (Thursday) proposed the launch of an AI-powered ‘conversational payment’ method.

AI Meets UPI

According to RBI, the innovative payment method will run on the Unified Payments Interface (UPI), India’s real-time payment system that facilitates peer-to-peer and person-to-merchant transactions. The system was developed by the National Payments Corporation of India (NPCI) and is regulated by the RBI.

The central bank noted that its UPI supported by AI will make it possible for citizens to initiate and complete payment transactions “in a safe and secure environment” through conversations. The monetary authority believes this move can improve the payment system and deepen digital penetration in the country.

“UPI, with its ease of usage, safety and security, and real-time feature, has transformed the digital payment ecosystem in India. The addition of many new features over time has enabled UPI to facilitate the diverse payment needs of the economy,” RBI explained in a statement.

The central bank added: “As Artificial Intelligence (AI ) is becoming increasingly integrated into the digital economy, conversational instructions hold immense potential in enhancing the ease of use and consequently reach, of the UPI system.”

To facilitate ‘conversational payment’, RBI explained, the new payment method will be made accessible on smartphones and other phone-based UPI interfaces. However, the service will be first rolled out in Hindi and English, with support for other regional languages to follow.

Offline Payments in UPI

Meanwhile, as part of changes to its developmental and regulatory policies, RBI on Thursday proposed making it possible for Indian residents to conduct offline transactions using Near Field Communication (NFC) technology on ‘UPI-Lite’, a simplified version of the UPI that was introduced in September 2022 and designed for low-value transactions. NFC is the technology that underpins many contactless payment systems.

“This feature will not only enable retail digital payments in situations where internet/telecom connectivity is weak or not available, but it will also ensure speed, with minimal transaction declines,” the central bank stated.

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