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Unified Payments Interface (UPI) has emerged as a dominant force in transforming India’s payment landscape since its inception in 2016 by the National Payments Corporation of India (NPCI). Over the past few months, several significant changes to UPI payments have been announced by the NPCI, with some coming into effect in January and others proposed for the near future.
1. Increased UPI Transaction Limits for Specific Payments:
In December, RBI Governor Shaktikanta Das announced a substantial increase in the UPI transaction limit, specifically for payments to hospitals and educational institutions. The limit has been raised from Rs 1 lakh to Rs 5 lakh. This adjustment aims to encourage the adoption of UPI for online payments in these critical sectors.
2. Deactivation of Inactive UPI IDs:
The NPCI issued instructions to payment apps and banks to deactivate inactive UPI IDs that remained unused for more than a year, with the deadline set for December 31, 2023. This proactive measure prevents unintended money transfers to inactive or changed mobile numbers, reducing the risk of inadvertent transactions.
3. No Authentication for UPI Auto Payments Up to Rs 1 Lakh:
The RBI introduced a noteworthy change, stating that UPI payments up to Rs 1 lakh, in specific cases, will no longer require additional factor authentication (AFA). This exemption applies to e-mandates used for recurring payments such as credit card repayments, mutual fund subscriptions, and insurance premiums. Previously, the limit for transactions without AFA was Rs 15,000.
4. Increased UPI Lite Wallet Transaction Limit:
The transaction limit for UPI Lite wallets conducted offline has been raised from Rs 200 to Rs 500, with a maximum transferable amount of Rs 2,000. This adjustment aims to boost the usage of UPI Lite wallets, especially in areas with inconsistent internet connectivity.
5. Interchange Fee on Certain UPI Payments:
NPCI introduced an interchange fee of 1.1% on UPI payments made by specific merchants, particularly for transactions above Rs 2,000 and involving prepaid payment instruments like online wallets.
6. Proposed Change: ‘UPI for Secondary Market’:
The NPCI unveiled the Beta phase of ‘UPI for Secondary Market,’ facilitating transactions related to the secondary market. HDFC Bank has already executed transactions through this facility.
7. Proposed Change: UPI ATM and ‘Tap and Pay’ Functionality:
Hitachi Payment Services introduced the country’s first UPI-ATM as a White Label ATM in collaboration with NPCI. Additionally, UPI members are expected to introduce the ‘Tap and Pay’ functionality, allowing users to make payments using UPI through phones equipped with NFC technology.
As these changes unfold, UPI continues to evolve as a versatile and convenient payment solution, contributing to the broader digital financial ecosystem in India.
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