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The National Payments Corporation of India (NPCI) is all set to raise the transaction cap from ₹1 lakh to ₹2 lakh in order to push the digital payment system in the country.
The transaction limit will be doubled starting from the next fiscal year for payments through Unified Payment Interface (UPI) at stores run by ‘verified merchants’, ET Tech reported.
NPCI circulated notice regarding the increased transaction limit to all member banks on the UPI network. The notice informed that the new limit will be applicable for other high-ticket transactions including investment in the capital market, bill collections, insurance premiums, and pre-approved disbursements. This will not apply for peer-to-peer transfers, the ET Tech report added.
According to the circular, the NPCI has decided to increase the transaction limit as it observed that the UPI system is emerging as a preferred method of payment. It also took into cognisance that there is an increase in demand to extend the per transaction limit in UPI which stands currently at ₹1 lakh now, the report stated.
According to a previous report, digital payments got a fresh boost in February with UPI touching a new high in terms of transaction value and volumes. Data with the NPCI revealed that UPI transactions touched ₹132.32 crore, involving ₹2.2-lakh crore.
NPCI also told banks to make the “requisite changes on the mobile app and application systems.” NPCI also mentioned that it may add more categories to the new transaction limit “as and when required.”
Boost for digital payment platforms
The move will likely boost the business of digital payment platforms, including homegrown majors PhonePe and Paytm. The online platforms have recently extended their financial services including insurance and incorporated mutual funds on their respective applications.
According to Hemant Gala, Vice President, payments and financial services, PhonePe, who was cited in the ET tech report, the enhanced transaction limit will drive customer confidence on the UPI system. It will benefit other new services like mutual funds, insurance, CC repayments among others. He added that he looks forward to the change which will benefit their customers.
Meanwhile, the online digital payment platforms are working towards increasing their verified merchant base to further their services. This is done through the deployment of QR codes and POS devices at retail stores across the country.
Since October last year, UPI has witnessed over 1 billion transactions every month. UPI had crossed ₹100-crore transactions in October last year, a major milestone for the payment service which was launched in 2016.
The findings of a pre-campaign study conducted among 12,800 people in four zones, showed that the awareness and information about UPI is at 60 per cent, as per the previous report.
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