In a dynamic financial landscape, the Unified Payments Interface (UPI) has emerged as a cornerstone in transforming the way Indians handle digital transactions.
November 2023 witnessed an unprecedented surge in UPI transactions, reaching a staggering Rs 17.4 trillion. This marks a 1.4% increase from the previous month’s Rs 17.16 trillion, underscoring the growing prominence of UPI in the country’s digital payment ecosystem.
Unified Payments Interface (UPI) has become the go-to payment method for millions in India, fostering a significant rise in digital transactions. To further refine and improve the UPI experience, various regulatory changes have been implemented, particularly by the Reserve Bank of India (RBI), aiming to fortify the system against misuse and enhance user security.
Decoding the Key Changes
- Deactivation of Inactive UPIs
The National Payments Corporation of India (NPCI) has mandated the deactivation of UPI IDs and associated numbers that have been inactive for over a year. This strategic move aims to prevent dormant accounts and potential misuse, aligning with the broader goal of tightening security measures in the digital payment space. - Increased Transaction Limits
NPCI has set a new maximum daily payment limit of Rs 1 lakh for general UPI transactions. However, recognizing the unique needs of specific sectors, the RBI has raised the UPI transaction limit for hospitals and educational institutions to Rs 5 lakh. This adjustment facilitates higher online payments, especially crucial for these critical sectors. - Interchange Fee
Introduced in early 2023, a 1.1 per cent interchange fee applies to specific merchant UPI transactions exceeding Rs 2,000. This fee, applicable to payments made through prepaid instruments like online wallets, ensures that users won’t incur additional costs during these transactions, contributing to a more transparent payment ecosystem. - Four-hour Time Limit
To combat the rising cases of online payment fraud, discussions have surfaced about implementing a four-hour time limit for the first payment exceeding Rs 2,000 between users who haven’t transacted before. The potential introduction of the ‘Tap and Pay’ feature adds another layer of convenience, pending an official announcement. - UPI ATM
The RBI is set to introduce UPI ATMs nationwide, revolutionizing the way users access their funds. With these ATMs, users can conveniently withdraw cash directly from their bank accounts by scanning a QR code, simplifying the cash withdrawal process. - Beta Phase for ‘UPI for Secondary Market’
NPCI’s ‘UPI for Secondary Market’ has entered the Beta phase, allowing limited pilot customers to block funds post-trade confirmation and settle payments on a T1 basis via Clearing Corporations. This development showcases UPI’s adaptability to different sectors, promising efficiency and security. - Cash Withdrawal via QR Code
Hitachi Payment Services has collaborated with NPCI to launch India’s first UPI-ATM, enabling cash withdrawal via QR code scanning. This innovation is geared towards providing users with a seamless and accessible way to manage their finances.
Evolving Towards a Secure and Efficient UPI Ecosystem
As UPI continues to evolve, these changes are strategically implemented to enhance security, curb misuse, and provide a robust and efficient payment experience for users nationwide. The recent hike in transaction limits for hospitals and schools, coupled with innovations like UPI ATMs and Cash Withdrawal via QR Code, underscores the commitment to making UPI a versatile and user-friendly payment solution.
