UPI Transactions

• Recently the banks have put daily limits for the transactions facilitated by the Unified Payments Interface (UPI).

UNIFIED PAYMENTS INTERFACE (UPI)

• UPI is a digital payment system through which a user can both send and receive money through a Virtual Payment Address (VPA). The money will be directly debited from the customer’s bank account.
• It was developed by National Payments Corporation of India (NPCI) in 2016.

VIRTUAL PAYMENT ADDRESS (VPA)

• VPA is a unique identifier that helps UPI to track a person’s account.
• VPA can be used to make and request payments through a UPI-enabled app. There is no need to fill bank account details repeatedly for making multiple payments.

UPI TRANSACTION LIMIT

• Limit set by NPCI:
• At present, users can make up to 20 transactions or Rs. 1 lakh in a single day – either all at once or through the day.
• For certain specific categories of transactions such as the capital markets, collections (such as bills), insurance and forward inward remittances, the limit is Rs. 2 lakh.
• In December 2021, the limit for the UPI-based ASBA (Application Supported by Blocked Amount) IPO and retail direct schemes was increased to 5 lakh for each transaction.
• Limits set by Banks and UPI apps: They can set limits with their own guidelines for UPI transactions. However, these limits must be within the overall upper limit set by the NPCI.
• The limit varies from small banks like Canara Bank which allows 25,000 transactions, to big banks like SBI that have set a limit of Rs. 1 lakh.
• Google Pay, Paytm, and Amazon Pay have set a limit of 1 lakh per day along with a total of up to ten transaction limits across all UPI apps and bank accounts.
• Reason: The limits are set to balance out customer convenience and potential fraud/risk concerns.

WHY IS UPI THE MOST PREFERRED PAYMENT MODE?

• Timely Transfer: It is based on the IMPS platform and works 24×7. Thus helps transfer funds instantly the moment a request is submitted.
• Multiple Accounts Linking: UPI apps allow linking over one bank account. One can simultaneously use the UPI IDs for multiple bank accounts, sending and receiving funds.
• Simple Interface: There are multiple smartphone apps for UPI activities which come with a simple and user-friendly interface.

INTERNATIONALISATION OF UPI:

• Several countries across the globe are adopting UPI for Person-to-Person (P2P), Person-to-Merchant (P2M) and cross-border payments.
• RBI has also taken steps for cross border linkage of fast payment systems of India and Singaporee. UPI-PayNow.