Banks Update UPI Transaction Limit: What You Need to Know

Banks Update UPI Transaction Limit: What You Need to Know

In a recent development, the Reserve Bank of India (RBI) has hiked the limit for unified payments interface (UPI) transactions from the current Rs 1 lakh to Rs 2 lakh per day. The move is aimed at furthering the adoption of digital payments in the country.

At present, there are over 150 banks live on the UPI platform and the transactions have been growing at a rapid pace. In December 2020 alone, over 1.49 billion UPI transactions were conducted worth Rs 4.28 lakh crore.

The RBI has been taking various measures to promote digital payments in the country and the latest move is in line with that objective. Let’s take a look at what this move entails and how it will impact users.

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What is UPI?

Unified Payments Interface or UPI is a real-time payment system developed by the National Payments Corporation of India (NPCI). It allows instant, 24/7 inter-bank fund transfers.

UPI is built over the Immediate Payment Service (IMPS) infrastructure and is compatible with all major mobile operating systems. It can be used to make payments via various banking apps as well as third-party apps like Google Pay, PhonePe, BHIM, etc.

How to Use UPI?

In order to use UPI, you need to have a UPI-enabled bank account and a smartphone. You then need to download a UPI app like Google Pay, PhonePe, BHIM, etc. and link your bank account with the app.

Once the account is linked, you will be given a UPI ID (also known as VPA or Virtual Payment Address). This can be used to send or receive money.

To send money, you just need to enter the UPI ID of the recipient, the amount, and your UPI PIN. The money will be transferred instantly.

Similarly, to receive money, you just need to share your UPI ID with the sender and they can transfer money to you.

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What Is the New UPI Transaction Limit?

The RBI has now increased the limit for UPI transactions from Rs 1 lakh to Rs 2 lakh per day. This move is aimed at furthering the adoption of digital payments in the country.

Currently, there are over 150 banks live on the UPI platform and the transactions have been growing at a rapid pace. In December 2020 alone, over 1.49 billion UPI transactions were conducted worth Rs 4.28 lakh crore.

The RBI has been taking various measures to promote digital payments in the country and the latest move is in line with that objective.

What Are the Benefits of The New UPI Transaction Limit?

The increase in the UPI transaction limit will be beneficial for users in a number of ways.

First of all, it will allow users to make higher value transactions without having to use other payment modes like NEFT, RTGS, etc.

Secondly, it will also help in reducing the number of transactions. For instance, if you want to transfer Rs 1.5 lakh, you will now be able to do so in a single transaction instead of having to do two transactions of Rs 1 lakh each.

Lastly, it will also help in reducing the transaction costs. At present, banks charge a certain amount for NEFT, RTGS, and IMPS transactions. With the increase in the UPI transaction limit, you will be able to save on these transaction costs.

What Are the Other Benefits of UPI?

In addition to the above, UPI also offers a number of other benefits.

1. UPI is a 24/7 service, which means you can transfer money anytime, anywhere.

2. UPI is a real-time payment system, which means the recipient will receive the money instantly.

3. UPI is a safe and secure payment system as it uses multiple layers of security.

4. UPI is a very convenient payment system as it can be used via various banking apps as well as third-party apps.

5. UPI is a very cost-effective payment system as it does not charge any transaction fees.

Conclusion:

The RBI’s decision to increase the UPI transaction limit from Rs 1 lakh to Rs 2 lakh is a welcome move. It will help in furthering the adoption of digital payments in the country.