Comply with higher UPI transfer limit by Jan 10, NPCI directs members

RBI had earlier increased the UPI transaction limit to Rs 5 lakh for hospitals and educational services

The National Payments Corporation of India (NPCI) has directed members to comply by January 10 with the Reserve Bank of India’s (RBI’s) decision to increase the UPI transaction limit to Rs 5 lakh for hospitals and educational services. 

To ensure compliance, the NPCI has instructed banks, payment service providers (PSPs), and UPI applications to increase transaction limits for the specified merchant categories.

“It is a move in the right direction. The average ticket size has gone up in these sectors. So, it’s a good move to increase the limits,” said Vishwas Patel, joint managing director, Infibeam Avenues. He anticipates no significant challenges in implementing these changes by January 10.

PhonePe has also confirmed that it was “on track to roll out the required changes for users as per the prescribed timelines.”

Also, the NPCI has clarified that the increased limit, from Rs 1 lakh to Rs 5 lakh, will only apply to “verified merchants”. “Members (PSPs & Banks), UPI apps, merchants, and other payment providers are requested to take note of the enhancement, and undertake requisite changes. Members are requested to ensure compliance with the same by 10th January 2024,” it said in a circular.  

Merchants are required to enable UPI as a payment mode with the increased limits. Acquiring entities will be responsible for adding merchants to the verified list after conducting due diligence.

“Here, the due diligence is to be done by the merchant acquirer and not by PhonePe in its role as a third-party application provider (TPAP). That said, since we also play the role of an acquirer, we have our own internal due diligence process to ensure conformance with the regulatory requirements,” PhonePe said in response to queries sent by Business Standard. 

Patel further explained that part of the due diligence process involves ensuring that the enhanced transaction limit is applied to the appropriate categories. He emphasised the importance of preventing misuse of the system, such as hotels falsely claiming to be hospitals.

Last month, the RBI announced an increase in the UPI payment limit for hospitals and educational services. The limit for a UPI transaction was previously capped at Rs 1 lakh, except in certain categories like capital markets and collections, which include credit card payments, loan repayments, and insurance, among others, where the transaction limit is capped at Rs 2 lakh.

In related news, the NPCI has initiated the process to deploy “UPI Tap and Pay” across digital payment providers, following the release of details on the feature’s rollout. Members are expected to implement the UPI Tap and Pay functionality by January 31, 2024.