Starting January 1, 2024, the Reserve Bank of India (RBI) has implemented several measures to enhance and regulate the Unified Payments Interface (UPI), a rapidly growing mode of immediate money transfers through mobile devices in the country.
To broaden the scope of UPI payments, the National Payments Corporation of India (NPCI) has directed payment apps and banks, including Google Pay, Paytm, and PhonePe, to deactivate UPI IDs and numbers inactive for over a year. Additionally, the daily payment limit for UPI transactions is capped at ₹1 lakh.
However, exceptions have been made, and on December 8, 2023, RBI increased the transaction limit for UPI payments to hospitals and educational institutions to ₹5 lakh. Meanwhile, a 1.1% interchange fee will be applicable on specific merchant UPI transactions exceeding ₹2,000 and made using prepaid payment instruments (PPI), such as online wallets.
In response to the rising instances of online payment fraud, a four-hour time limit will be imposed each time a user initiates the first payment exceeding ₹2,000 to another user with whom they have not previously transacted. The introduction of the UPI ‘Tap and Pay’ functionality is anticipated to go live for UPI members soon.
Moreover, a collaboration between RBI and the Japanese company Hitachi will bring UPI ATMs to various locations in India. With this, users can scan a QR code to withdraw cash directly from their bank accounts.
The Unified Payments Interface (UPI) has witnessed tremendous growth, crossing 10 billion transactions in August 2023. The new regulations aim to streamline and secure UPI transactions, making it a more efficient and reliable mode of digital payments in India.