Banks, payment service providers and UPI apps will have to update per-transaction limits. (File)
The National Payments Corporation of India (NPCI) has increased the Unified Payments Interface (UPI) transaction limit to Rs 5 lakh for certain types of payments. Effective September 16, this change will bring more flexibility and convenience to users making high-value transactions through UPI.
The standard UPI transaction limit has been Rs 1 lakh per transaction, while there is a slightly higher limit of Rs 2 lakh for specific categories such as capital markets, collections, insurance and foreign inward remittances. As per the new measure mentioned in the NPCI circular dated August 24, this limit will increase to Rs 5 lakh for transactions related to tax payments, payments to hospitals and educational institutions, and investments in IPOs and RBI retail direct schemes.
According to the NPCI circular, the following conditions must be met “to enable this enhancement”:
Banks, Payment Service Providers (PSPs) and UPI Apps will be required to update the per transaction limits for the categories of verified merchants specified in the Annexure.
The acquiring entities have to ensure that only the merchants classified under 'MCC-9311' are handling the tax payments exclusively. They have to include these entities in the 'Verified Merchant' list only after thorough due diligence.
Merchants will have to enable UPI as a payment option for transactions up to the new limit, especially for tax payments.
The decision to increase the UPI transaction limit by NPCI has been taken due to the increasing popularity of the payment method in India. “With the emergence of UPI as the preferred payment method, there is a need to increase the per transaction limit in UPI for specific categories,” NPCI said in its circular.
The organisation has urged all stakeholders in the payments ecosystem, including banks, payment service providers and UPI apps, to ensure that their systems are updated to accommodate the new transaction limits.
This increase is expected to streamline high-value transactions and provide more options for users engaged in critical financial activities. To ensure smooth transactions under the new limit, users are advised to verify with their banks and UPI service providers whether the increased limit applies to their specific transactions.