NPCI Urges UPI Limit to Increase by January 10

The National Payments Corporation of India (NPCI) has announced that banks and payment service providers (PSPs) must comply with the banking regulator’s regulation by January 10th. According to Business Standard, the purpose of this guideline is to raise the UPI transaction limit to Rs 5 lakh for transactions involving healthcare and educational services.

In accordance with this latest modification, NPCI is urging banks, PSPs, and UPI applications to modify their transaction limitations, particularly for particular categories of enterprises. This means that the previous cap of about Rs 1 lakh has been significantly increased to Rs 5 lakh for transactions pertaining to hospitals and educational services.

Joint Managing Director of Infibeam Avenues Vishwas Patel believes this is a good move. Particularly in light of the increasing average transaction size in these industries. Putting these modifications into effect by January 10th, in his opinion, shouldn’t present too many difficulties.

Additionally, PhonePe has affirmed that they plan to implement the required improvements for users within the specified timeframes.

New Year, New Rules

It is vital to acknowledge that the elevated transaction threshold of Rs 5 lakh is exclusively applicable to “verified merchants.” PSPs, banks, UPI applications, and merchants are among the members of the NPCI who have been asked in a circular to take note of this upgrade and make the necessary adjustments. By January 10, 2024, compliance with these modifications is anticipated.

Merchants must activate UPI with these increased restrictions; purchasing companies, after doing due diligence, are responsible for validating and adding merchants to the verified list.

PhonePe made it clear that they do not do the due diligence on behalf of merchants in their capacity as a third-party application provider (TPAP). Rather, this procedure falls within the purview of the merchant acquirer. To guarantee regulatory compliance, PhonePe, in its capacity as an acquirer, has its own internal due diligence procedure.

New UPI Rules Guidelines for 2024

These five guidelines are essential for anybody using UPI.

• Inactive UPI IDs: All UPI IDs that have lain idle for more than a year are to be deactivated. As per NPCI directives to banks and online payment services like Google Pay, Paytm, and PhonePe.
• UPI for Secondary Market: The “UPI for Secondary Market” initiative, launched by NPCI, has begun its beta testing. Through the app, limited pilot clients can restrict money after transaction confirmation. And use Clearing Corporations to settle payments on a T1 basis.
• Transaction limit: For UPI payments, the central bank has significantly increased the transaction limit. RBI Governor Shaktikanta Das made an additional limit hike announcement in December. The upper limit is now Rs 5 lakh instead of Rs 1 lakh. Payments to hospitals and educational institutions will be subject to this cap. The choice was indeed made to promote UPI adoption for these kinds of transactions.
• Cash Withdrawal with QR Code: India’s first UPI-ATM has been launched by NPCI and Hitachi Payment Services. This makes it possible to withdraw cash by only scanning the QR code. RBI intends to roll out UPI ATMs across the country.
• 4-hour window: The RBI has suggested a four-hour time limit for users. To initiate their initial payments exceeding Rs 2,000 to new receivers in order to ensure the safety of UPI transactions. Since users may now reverse or change transactions inside that time, an extra degree of control and security has been provided.