An Introduction to the Lightweight Payment System (LPSS)

The RBI has devised the LPSS to counter the potential vulnerabilities of existing payment systems like RTGS, NEFT, and UPI. These systems may falter during catastrophic events that disrupt communication infrastructure. The LPSS, however, is a robust payment system that is not only lightweight and portable but also operates independently of conventional technologies.

• The LPSS is independent of conventional technologies and can be managed from any location with minimal reliance on technology.
• The system is designed to function on minimalistic hardware and software and only becomes active when necessary.
• The LPSS primarily focuses on processing critical transactions that are crucial for maintaining the stability of the economy. This includes government and market-related transactions.

Advantages of the Lightweight Payment System

The LPSS is designed to provide uninterrupted financial services even when conventional payment systems are compromised due to disruptions in the underlying information and communication infrastructure.

• The system aims to maintain the liquidity pipeline of the economy by providing near-zero downtime.
• It facilitates uninterrupted essential payment services, including bulk payments, interbank payments, and cash provision to participant institutions.
• The LPSS operates independently of the technologies that underpin existing payment systems such as UPI, NEFT, and RTGS.

Differentiating LPSS from UPI

Conventional payment systems like RTGS, NEFT, and UPI are designed to handle a large volume of transactions while ensuring sustained availability. However, they rely on complex wired networks supported by advanced IT infrastructure.

• These systems can become temporarily unavailable during catastrophic events like natural calamities and war due to disruptions in the underlying infrastructure.
• In contrast, the LPSS makes minimal use of technology and can therefore operate even in disaster situations.