India is set to introduce voice-based and offline digital payment methods to enhance the country's rapidly expanding digital infrastructure and bridge the gap between rural and urban areas. The Universal Payments Interface (UPI), a crucial component of Prime Minister Narendra Modi's digital infrastructure initiative, aims to bring India's vast population online.

Since its launch in 2016, the UPI digital payments system has experienced significant growth, with around 350 million people now using it for various transactions. In July, the system recorded nearly 10 billion transactions, a surge of over 50% compared to the same month last year.

Despite this success, UPI's reach in India's rural areas has been limited by challenges such as sparse internet access and lower literacy rates outside urban centers. To address these issues, the Reserve Bank of India (RBI) has unveiled plans for "conversational" payments. Users will be able to provide verbal transfer instructions via their phones, processed through AI-based speech recognition to initiate transactions.

The RBI's plan includes the use of open-source AI language tools developed by the Indian Institute of Technology Madras, initially available in English and Hindi before expanding to other languages. Additionally, users can conduct transactions without internet access using "near field communication" technology, a method commonly seen in contactless card transactions.

Dilip Asbe, head of the National Payments Corporation of India, which manages UPI, stated that these measures, set to be introduced in the coming months, will enable digital payments in non-urban areas, broadening the platform's reach.

Prime Minister Modi's government has actively promoted cashless payments as part of the India Stack digital infrastructure initiative, aiming to formalize the country's vast and unregulated cash-based economy. UPI has also been instrumental in attracting foreign investment, with companies like Google and PhonePe building popular payment apps.

Vijay Shekhar Sharma, founder of Indian payments group Paytm, views the offline function for UPI as a potential "game changer." However, analysts caution that digital tool access remains unequal, with less than half of Indians using the internet, and only 15% of rural households having internet access. India also houses the world's largest population of illiterate adults, numbering around 300 million people, presenting challenges to widespread digital adoption.