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The National Payments Corporation of India (NPCI) has announced a significant increase in the transaction limit for Unified Payments Interface (UPI) payments, enabling users to make single transactions up to ₹5 lakh for specific purposes. This move aims to cater to the growing demand for UPI payments and facilitate larger transactions in key sectors like tax payments, healthcare, and investments.
Previously, the general UPI transaction limit was ₹1 lakh per transaction, with a daily limit of ₹2 lakh for capital market transactions, collections, insurance, and foreign inward remittances. However, recognizing the increasing reliance on UPI for various financial transactions, the NPCI has decided to raise the limit to ₹5 lakh for certain categories. These categories include:
- Tax payments: Individuals and businesses can now pay taxes up to ₹5 lakh in a single UPI transaction, simplifying the process and potentially reducing reliance on traditional payment methods.
- Hospitals and educational institutions: This new limit aims to streamline larger payments for medical expenses and educational fees, providing greater convenience to users. However, it remains unclear whether this increase applies to all hospitals and educational institutions or is limited to specific ones.
- IPOs and RBI retail direct schemes: This enhancement allows investors to participate in initial public offerings (IPOs) and the Reserve Bank of India's (RBI) retail direct scheme with larger single payments, making it easier to invest in these financial instruments.
The NPCI has given banks, payment service providers, and UPI app developers a deadline of September 15, 2024, to ensure compliance with the new transaction limit. This deadline is crucial for all players in the UPI ecosystem to prepare their systems to handle the higher transaction values. The new limit will become effective from September 16, 2024, marking a significant step in the evolution of UPI payments.
While this increased limit offers benefits to users, it is crucial to note that merchants and service providers will need to be verified to facilitate these transactions. Banks also have the authority to set their own daily UPI transaction limits, so users should confirm with their respective banks and UPI apps to understand the specific limits applicable to their accounts.
Source: UPI transaction limit increased to ₹5 lakh for three types of payments: Date and details