RBI increases UPI Lite and UPI 123Pay Limits: What it means for you

The Reserve Bank of India (RBI) has announced an increase in the transaction limits for UPI 123Pay and UPI Lite. The per-transaction limit for UPI 123Pay has been raised from ₹5,000 to ₹10,000, while the UPI Lite wallet limit has increased from ₹2,000 to ₹5,000.

RBI MPC on UPI

• Enhance per transaction limit in UPI 1 2 3 pay to ₹10000 from ₹5000
• UPI Lite wallet increased to ₹5000 from ₹2000
• UPI Lite per transaction limit raised to ₹500 from ₹100

RBI Monetary Policy Meeting LIVE Updates

"UPI has significantly changed India's financial landscape by making digital payments more accessible and inclusive through ongoing innovation. To further promote UPI adoption, two key enhancements have been announced: (i) the per-transaction limit for UPI123Pay will be raised from ₹5,000 to ₹10,000, and (ii) the UPI Lite wallet limit will increase from ₹2,000 to ₹5,000, with the per-transaction limit going from ₹500 to ₹1,000," said Governor Shaktikanta Das.

Industry experts view this change as a significant advancement for financial inclusion and the adoption of digital payments in India. Siddharth Maurya, Founder and Managing Director of Vibhavangal Anukulakara Private Limited, noted that this increase responds to the needs of diverse user groups. Raghunandan Saraf, Founder and CEO of Saraf Furniture, emphasized that these new limits will allow feature phone users to access higher-value transactions, with UPI 123Pay utilizing four technology options to support this growth.

Saraf predicts that these enhanced limits will lead to an uptick in higher-value transactions and a decrease in cash usage. The UPI Lite wallet, now with a limit of ₹5,000 and a transaction cap of ₹1,000, is expected to promote more low-value offline digital transactions.

"UPI 123Pay is tailored for India's 400 million feature phone users, enabling them to make digital payments without needing a smartphone or internet connection. Users can set up UPI 123Pay by dialling *99#, selecting their bank, entering debit card details, and creating a UPI PIN, ensuring secure transactions even without internet access," explained Mehul Mistry, Global Head of Strategy, Digital Financial Services & Partnerships at Wibmo, Inc 

He added that UPI Lite allows users to store money directly on their devices, simplifying payments and eliminating the need to access a bank server for each transaction. This development enhances the usability of digital payments for feature phone users and streamlines small transactions for those using the UPI Lite wallet.

New Beneficiary Name Verification for RTGS and NEFT

A new Beneficiary Account Name Look-up Facility will be introduced to enhance the security of digital transactions. This feature, already available for UPI and IMPS, will now extend to the RTGS and NEFT systems, allowing users to verify recipient names before completing fund transfers.

"Additionally, a Beneficiary Account Name Look-up Facility will be introduced. Currently, UPI and Immediate Payment Service (IMPS) allow users to verify the recipient's name before making a payment. This feature will now be extended to the Real Time Gross Settlement System (RTGS) and the National Electronic Funds Transfer (NEFT) system, enabling remitters to confirm the account holder's name before transferring funds. This enhancement aims to minimize errors and reduce the risk of fraud," RBI Governor said.

During RBI policy announcement

It is vital to recall that while announcing the monetary policy statement on 8 August 2024, Reserve Bank of India Governor Shaktikanta Das announced raising the limit of tax payments through UPI from ₹1 lakh to ₹5 lakh.