The Reserve Bank of India (RBI) has given flexibility to the National Payments Corporation of India (NPCI) to update transaction limits for person-to-merchant (P2M) payments done through the Unified Payments Interface (UPI). This move, announced by RBI Governor Sanjay Malhotra, enables NPCI to modify these caps in consultation with banks and other stakeholders, aligning with the RBI’s drive to fulfill changing user needs and facilitating easier digital transactions in the retail sector.
UPI transactions are currently capped at ₹1 lakh for both P2P and P2M payments, though certain P2M applications have higher caps of ₹2 lakh or ₹5 lakh. The new regulation allows NPCI to increase such limits based on real-time feedback and upcoming trends so that the payments environment can evolve rapidly to respond to new needs without having to seek additional RBI approvals. This freedom of action is specifically useful in industries such as health, education, and tourism, which involve frequent high-value digital payments.
P2P transactions, nonetheless, will remain capped at ₹1 lakh. Banks will have the freedom to define their own internal limits within the parameters set by NPCI, maintaining a risk management approach that is balanced. Adequate precautions will be put in place to counter risks posed by higher-value transactions, ensuring the system grows safely with changing market requirements.
Also Read | WhatsApp set to revolutionise digital payments with UPI Lite integration
Industry players appreciate this move, pointing out that it will drive quicker consumer and business adoption of digital payments, making them more convenient and credible. The action is in line with India’s move towards a cashless economy and more resilient digital payments infrastructure. Empowering NPCI to dynamically alter transaction limits, the RBI is looking to increase the efficiency and responsiveness of India’s rapidly transforming digital payment ecosystem, facilitating high-value frequent use cases across sectors.
