RBI Ups Limits for UPI 123Pay and UPI Lite Transactions

Reserve Bank of India (RBI) Governor Shaktikanta Das announced an increase in the pre-transaction limits for UPI 123Pay and UPI Lite payment mechanisms. This announcement, made on September 10, 2024, marks a significant step forward in the RBI’s ongoing efforts to promote digital payment systems in India, making it easier and more efficient for users to manage their financial transactions. Under the new guidelines, users will soon be able to conduct low-value UPI transactions of up to Rs 1,000 without entering the PIN, a substantial increase from the previous limit of Rs 500. This change is expected to make small payments quicker and more convenient, thereby promoting wider acceptance and penetration of digital payments in India.

In addition to the transaction limit, the balance limit for UPI Lite has also been raised to Rs 5,000 from the previous limit of Rs 2,000. UPI Lite, which is available on various payment apps such as Paytm, BHIM App, Google Pay, and others, was introduced in September 2022 to enable small value payments in a quick and seamless manner through an on-device wallet. Several banks are already offering the UPI Lite facility, and this increase in the balance limit is expected to enable users to conduct a greater number of transactions before needing to recharge, thus enhancing the usability and convenience of the system for daily transactions.

Ramakrishnan Ramamurthy, Chief Delivery and Operations Officer–India, Worldline, emphasized the need for higher levels of commerce enablement for last-mile coverage. He stated, To achieve this, the convenience of UPI 123 and UPI Lite has now gained wider reach and acceptance. Increasing the transaction limits is a positive initiative that will help enhance penetration from both transaction and value perspectives. Echoing similar sentiments, Venkatraman Venkateswaran, Group President and CFO, Federal Bank, welcomed the increase in per transaction limit for UPI/UPI Lite wallet, stating that it is a positive move that will benefit more users.

In a related development, the RBI recently introduced Auto-Replenishment of UPI Lite Wallet, a step aimed at wider adoption of UPI Lite by bringing it under the e-mandate framework. This move is expected to further enhance the ease of making small value digital payments, according to the RBI Governor. UPI123Pay, launched by NPCI in March 2022, is an instant payment system for feature phone users who can use UPI payment service in a safe and secure manner. This facility is now available in 12 languages, further enhancing its accessibility and usability.

This move by the RBI is reminiscent of similar initiatives taken in the past to promote digital transactions. For instance, in 2021, the RBI had stated that banks cannot charge customers for failed transactions, a move aimed at promoting digital transactions by reducing the financial burden on customers. Similarly, the introduction of the Beneficiary Account Name Look-up Facility for RTGS and NEFT systems was another step towards enhancing the security of digital transactions. The increase in pre-transaction limits for UPI 123Pay and UPI Lite is a significant move that is expected to benefit a large number of users by making small value digital payments more convenient and efficient. It is a testament to the RBI’s commitment to promoting digital transactions in India and enhancing the overall user experience. This move is expected to further the cause of financial inclusion and digital empowerment in the country.