Requirement For Limits On UPI Transactions
Context:
- Users can currently make up to 20 transactions, or Rs. 1 lakh, in a single day, either all at once or spread out over the day.
- Limits would assist preserve a crucial security infrastructure and its flawless operation as the payments interface aims to increase its footprint and rising utility in daily life.
- Up until February of the fiscal year 2022–23, there had been 95,402 documented UPI scams, an increase of nearly 13% from the prior fiscal year. But at the same time, the fraud-to-sales ratio dropped to 0.0015%.
Unified Payments Interface (UPI)
- UPI is an advanced version of Immediate Payment Service (IMPS) which allows for round–the–clock funds transfer service to make cashless payments faster, easier and smoother.
- UPI can link multiple bank accounts into a single mobile application of any participating bank thereby merging several banking features which helps in seamless fund routing.
- UPI is operated by the National Payments Corporation of India (NPCI) which also operates the National Automated Clearing House (NACH), Immediate Payment Service (IMPS), Aadhaar enabled Payment System (AePS), Bharat Bill Payment System (BBPS), RuPay etc.
- UPI was launched by NPCI in 2016 with 21 member banks.
- The NPCI has allowed non-resident Indians to link their non-resident external accounts (NRE) and non-resident ordinary accounts (NRO) which have international numbers to be linked to UPI.
- In October 2018 NPCI had allowed UPI transactions to and from NRO/NRE accounts linked to Indian numbers.
- Users from ten countries (Singapore, Australia, Canada, Hong Kong, Oman, Qatar, the U.S., Saudi Arabia, UAE, and the U.K.) will be able to avail of the facility.
Points to Ponder:
- UPI daily limits: Users of UPI are now only permitted to do 20 transactions, or Rs. 1 lakh, in a single day. A higher restriction of 2 lakh rupees applies to some specialised sectors, including capital markets, collections, insurance, and forward inbound remittances. The transaction cap for the ASBA IPO and retail direct programmes using UPI is 5 lakh rupees.
- restrictions unique to banks: Some banks have established their transactional caps, which are less restrictive than the typical UPI caps. For instance, the restrictions for Punjab National Bank (PNB) and Bank of Baroda are 25,000 and 50,000, respectively.
- App-specific restrictions: Some applications, like Google Pay, have their transactional restrictions. If users attempt to send money more than 10 times in one day across all UPI apps, they risk exceeding the daily limit.
- balancing client security and convenience: The restrictions are aimed to strike a compromise between client convenience and worry about fraud and risk. To make sure the required changes are made, the National Payments Corporation of India (NPCI) and ecosystem participants constantly evaluate transaction and value limitations. Specific categories with higher transaction values, such as capital markets or credit card bill payments, are given higher limits.
- Trending UPI: UPI transaction volume has significantly increased in recent years. UPI transactions totalled 9,415.19 million in May 2023 and had a collective value of $14.89 lakh crore. Peer-to-peer (P2P) transactions made up roughly 43% of the volume but contributed more money, totalling 11.45 lakh crore. P2M (peer-to-merchant) transactions dominated the same amount bracket with 84.3% of the market, while the majority of P2P transactions were in the sub-500 range.
- UPI fraud cases: As UPI transactions have grown, so have the number of recorded UPI frauds. Though the fraud-to-sales ratio has decreased, it still shows that fraud is quite uncommon. The total number of reported UPI fraud instances grew from the prior year by around 13% in the fiscal year 2022–2023, totalling 95,402 cases.
- Importance of the security infrastructure: To counteract the rising fraud incidents, the developing UPI ecosystem must have a strong security infrastructure in place. This guarantees the security of transactions and upholds user confidence.
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