RBI increases UPI Lite and UPI 123Pay limits: What's the implications?

The Reserve Bank of India (RBI) has maintained its key interest rate at 6.5% for the tenth time, as announced by Governor Shaktikanta Das. The Monetary Policy Committee (MPC) has also raised the per transaction limit to ₹10,000 and enhanced UPI Lite wallet and transaction limits.

Key Highlights:

UPI 123Pay Transaction Limit Increased: The per-transaction limit for UPI 123Pay has been raised from ₹5,000 to ₹10,000. This change allows users to conduct higher-value transactions, especially benefiting those who use feature phones.

UPI Lite Wallet Limit Increased: The UPI Lite wallet limit has been increased from ₹2,000 to ₹5,000. Additionally, the per-transaction limit has been raised from ₹500 to ₹1,000, making it easier for users to manage low-value offline transactions.

Industry Insights:

Experts view these changes as significant advancements for financial inclusion and digital payment adoption in India. Siddharth Maurya, Founder and Managing Director of Vibhavangal Anukulakara Private Limited, highlighted that the increased limits respond to the needs of diverse user groups. Raghunandan Saraf, Founder and CEO of Saraf Furniture, emphasized that these new limits will enable feature phone users to access higher-value transactions, supporting this growth through four technology options.

Saraf predicts that these enhancements will lead to an increase in higher-value transactions and a reduction in cash usage. The UPI Lite wallet, now with a higher limit, is expected to boost low-value offline digital transactions.

UPI 123Pay for Feature Phone Users:

UPI 123Pay is specifically designed for India's 400 million feature phone users, allowing them to make digital payments without needing a smartphone or internet connection. Users can set up UPI 123Pay by dialing *99#, selecting their bank, entering debit card details, and creating a UPI PIN, ensuring secure transactions.

UPI Lite for Simplified Payments:

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 UPI Lite wallet users.

Enhanced Security for Digital Transactions:

The RBI has also announced the introduction of a Beneficiary Account Name Look-up Facility for RTGS and NEFT systems. This feature, already available for UPI and IMPS, allows users to verify recipient names before completing fund transfers, minimizing errors and reducing fraud risk.

Conclusion:

These enhancements by the RBI are expected to further promote digital payments in India, making them more accessible and secure for a broader range of users. With higher transaction limits and improved features, UPI 123Pay and UPI Lite are set to play a crucial role in advancing financial inclusion across the country.