The Reserve Bank of India (RBI) has recently implemented significant changes to the functioning of UPI payments. Effective January 1, these changes have had a notable impact. Among the notable changes is the fact that users can now carry out larger transactions through UPI. Furthermore, there are now guidelines in place regarding the deactivation of UPI IDs that have been inactive for some time. These adjustments have been made in accordance with the RBI guidelines for UPI transactions.
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What are the UPI Transactions?
The guidelines set by RBI for UPI transactions have revolutionized the way multiple bank accounts operate through a single mobile application. This app, accessible through any participating bank, seamlessly integrates different banking services, simplifying fund transfers and merchant payments into one centralized location.
What is a Prepaid Payment Instrument (PPI) in UPI?
According to the RBI guidelines for UPI transactions, the term Prepaid Payment Instrument (PPI) encompasses a wide range of digital wallets. These convenient tools enable individuals to securely store funds and easily make digital purchases. PPIs come in various forms such as wallets, smart cards, preloaded gift cards, vouchers, and magnetized chips. When utilizing a PPI, like PhonePe, for a transaction, you can simply scan a UPI QR code to complete the payment. Other popular examples of PPIs that adhere to these guidelines include Paytm, SODEXO vouchers, Amazon Pay, and Freecharge.
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New RBI Guidelines for UPI Transactions effective from January 1, 2024
Increase in Transaction Limits for UPI Lite Wallets
Great news for UPI Lite wallet users! The recent RBI guidelines for UPI transactions have raised the transaction limit from Rs 200 to Rs 500. This is particularly advantageous for individuals without internet accessibility. It is important to note, though, that the maximum amount for online transfers still remains at Rs 2,000.
Increase in UPI Transaction Limit for Schools and Hospitals
The recent update to RBI guidelines for UPI transactions has brought about an increased transaction limit for payments to hospitals and educational institutions. Originally capped at Rs 1 lakh, the limit has now been raised to Rs 5 lakh. This development, announced by the RBI governor Shaktikanta Das during the bi-monthly Monetary Policy Committee (MPC) announcement, is aimed at promoting the use of UPI for online payments in these critical sectors.
No Authentication Required for UPI Auto Payments
The latest RBI guidelines for UPI transactions bring about a significant modification for payments regarding credit card repayments, mutual fund subscriptions, and insurance premiums. The upper limit for UPI payments in these sectors has now been raised to Rs 1 lakh, making it even more convenient. Plus, the added bonus is that these transactions no longer require additional factor authentication (AFA), which used to be limited to Rs 15,000 prior to the update.
Inactive UPI IDs will be deactivated
According to the RBI guidelines on UPI transactions, the National Payments Corporation of India (NPCI) is calling on banks and popular mobile payment apps such as Google Pay, Paytm, and PhonePe to disable UPI IDs and numbers that have been inactive for more than a year. This measure is aimed at safeguarding against inadvertent money transfers to unintended individuals in cases where customers have changed their mobile numbers without updating their banking information. The NPCI first announced this policy last year.
Interchange Fees for UPI Payments
When making P2P or P2M transactions using UPI, customers will not incur any interchange fees when using PPIs. P2P transactions refer to the transfer of funds between individuals, whereas P2M involves using UPI to pay merchants for purchases. This means that customers can conveniently use UPI for both personal and commercial purposes without worrying about additional fees.
When it comes to UPI transactions, there are certain fees known as interchange fees that banks charge each other for handling the transaction process. These fees are paid by the business or individual receiving the payment, also known as the merchant bank, to the person making the payment, also known as the payer bank.
It is important to note that these fees only apply to PPI merchant transactions, meaning that customers are never responsible for paying them. If your UPI is linked to a bank, you don’t have to worry about interchange fees. However, merchants who have their UPI linked to a wallet will be responsible for paying these fees. You can rest easy knowing that when making UPI payments to family, friends, individuals, or a merchant’s bank account, you won’t have to worry about any interchange fees.
Conclusion
The recent RBI guidelines for UPI transactions have brought about significant improvements, making digital payments more accessible and secure. These changes have brought increased transaction limits for specific sectors and simplified processes, resulting in a smoother user experience. Additionally, the elimination of interchange fees for certain UPI transactions, coupled with the convenience of UPI Lite wallets, adds to the overall ease of use. These updates demonstrate the continuous efforts to promote a user-friendly and efficient digital payment landscape, aligning with the ever-changing needs of consumers and businesses.
Frequently Asked Questions (FAQ)
The first 9 digits after the slash(/) in your UPI transaction ID are crucial. Take a moment to compare the amount deducted from your bank account to the amount shown in your Google Pay transaction. Double-check that the debit amount does not appear in your bank statement’s closing balance.
When it comes to UPI transactions, there is usually a cap of Rs. 1 lakh per day. However, for transactions related to education and healthcare, this limit is increased to Rs. 5 lakh. It is important to keep in mind that the specific daily transfer limit can range from Rs. 25,000 to Rs. 1 lakh, depending on which bank you are using.
In the event that you come across a Fraudulent UPI transaction, it is imperative that you take action by following these steps: submitting a formal complaint to the Ombudsman and adhering to the digital transaction regulations set by the RBI. You can conveniently and efficiently do this through the online portal at cms.rbi.org.in or by sending an email to crpc@rbi.org.in. By reporting promptly, you are guaranteeing necessary measures will be taken in accordance with regulatory protocols.
In the event of an error in a UPI transaction, it is important to take immediate action by informing your bank or UPI service provider, such as Google Pay. Timeliness is crucial; the sooner you alert them of the mistake, the greater likelihood of a successful reversal. Remember these steps to effectively address and correct any incorrect UPI transactions.