- 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.
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