UPI transactions: New regulations, changes come into effect

With an aim to enhance the scope of Unified Payments Interface (UPI) payments, the Reserve Bank of India (RBI) announced some measures and changes that will be applicable from Monday (January 1).

Used for immediate money transfers through mobile devices, the UPI has become the fastest-growing payment mode in the country. Since its launch, the volume of digital transactions in India has increased exponentially.

In August 2023, UPI achieved a remarkable milestone by crossing 10 billion transactions. A top official from the National Payments Corporation of India said that the country has the potential to do 100 billion UPI transactions a month.

Here are some of the key changes set to be introduced from Monday:

Deactivation of inactive UPI IDs

The National Payments Corporation of India (NPCI) has asked payment apps such as Google Pay, Paytm, PhonePe, etc., and banks to deactivate the UPI IDs and numbers that have not been active for more than one year.

UPI IDs and linked mobile numbers that haven’t been used for transactions for over 12 months will be deactivated. This aims to curb dormant accounts and potential misuse.

Enhanced transaction limit

The daily payment limit for UPI transactions shall now be ₹1 lakh maximum, as per NPCI.

However, RBI raised the transaction limit for UPI payments to hospitals and educational institutions to ₹5 lakh on December 8, 2023, to broaden the use of UPI payments. Earlier, the transaction limit was ₹1 lakh.

Interchange fee

There will also be a 1.1 per cent interchange fee on certain merchant UPI transactions above ₹2,000, made using prepaid payment instruments (PPI) like online wallets.

Four-hour time limit

To curb rising instances of online payment fraud, a four-hour time limit would be applicable each time a user initiates the first payment exceeding ₹2,000 to another user with whom they have not previously transacted. UPI members will be able to soon go live with the UPI ‘Tap and Pay’ functionality.

UPI ATMs in the offing

RBI in collaboration with the Japanese company Hitachi, will now roll out UPI ATMs all across India wherein you can scan a QR code to withdraw cash from your bank account.

Notably, the Unified Payments Interface (UPI) is a real-time payment system in India that allows seamless, instant transactions between different banks using smartphones.

UPI transactions in November 2023 clocked a fresh peak in value hitting Rs 17.4 trillion, up 1.4 percent compared to Rs 17.16 trillion in October 2023. At the same time, the number of transactions reduced by 1.5 percent to 11.24 billion versus a record high of 11.41 billion a month earlier.