UPI Transactions: Unveiling New Regulations and Changes Effective Today

UPI Transactions: Unveiling New Regulations and Changes Effective Today

Introduction:

In a bid to fortify the landscape of UPI payments, the Reserve Bank of India (RBI) has introduced several transformative measures set to come into effect from January 1, 2024. The Unified Payments Interface (UPI), hailed for its rapid and convenient money transfers via mobile devices, has witnessed exponential growth since its inception. This article sheds light on the noteworthy alterations poised to redefine UPI transactions in the country.

Changes in Transaction Limits and Deactivation of Inactive UPI IDs:

The National Payments Corporation of India (NPCI) has issued a directive to prominent payment applications like Google Pay, Paytm, PhonePe, and banks to deactivate UPI IDs and numbers dormant for over a year. Effective from the aforementioned date, the maximum daily payment limit for UPI transactions will be capped at ₹1 lakh, as mandated by NPCI. However, a recent move by the RBI on December 8, 2023, saw an elevation in the transaction limit for UPI payments to hospitals and educational institutions, allowing transactions up to ₹5 lakh.

Interchange Fee and Enhanced Security Measures:

In a bid to sustain the financial health of UPI transactions, a 1.1 per cent interchange fee will be levied on specific merchant UPI transactions exceeding ₹2,000 and facilitated through prepaid payment instruments (PPI) such as online wallets. To counter the escalating instances of online payment fraud, a stringent four-hour time limit will be imposed each time a user initiates the first payment surpassing ₹2,000 to a previously untransacted user. Soon, UPI members will unveil the 'Tap and Pay' functionality, enhancing the ease of transactions.

Revolutionizing Cash Withdrawals with UPI ATMs:

In a groundbreaking collaboration with the Japanese company Hitachi, the RBI is set to introduce UPI ATMs nationwide. This innovative approach will enable users to withdraw cash from their bank accounts by scanning a QR code, revolutionizing traditional cash withdrawal methods.

The Significance of UPI:

The Unified Payments Interface (UPI) stands as a real-time payment system in India, facilitating seamless and instantaneous transactions across various banks through smartphones. The UPI system reached a remarkable milestone in August 2023, surpassing 10 billion transactions. A prominent official from the National Payments Corporation of India envisions the potential for the country to achieve an impressive 100 billion UPI transactions monthly.

Conclusion:

As we usher in the new year, the amendments to UPI transactions promise a paradigm shift in the digital payment landscape. From revised transaction limits to enhanced security measures, these changes underscore the commitment of regulatory bodies to foster a secure and efficient financial ecosystem. The UPI system, with its continuous evolution, remains a pivotal player in driving India towards a digital and financially inclusive future.