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Unified Payment Interface (UPI)

Unified Payment Interface (UPI) is one of the popular methods of digital payments. This article covers the important developments regarding UPI.

Unified Payment Interface (UPI)

Unified Payment Interface (UPI) is an initiative by National Payments Corporation of India (NPCI) together with Reserve Bank of India (RBI) and Indian Banks Association (IBA). UPI allows linking of multiple bank accounts in a single mobile application for real-time bank-to-bank payments using mobile number, virtual payment address (UPI ID) or by scanning a QR code.

Benefits of UPI

  • Single application for accessing different bank accounts.
  • Offers peer-to-peer fund transfer, merchant payments and utility bill payments.
  • Allows payments using mobile number; virtual payment address (UPI ID); scanning QR code; bank account number and IFSC; and Aadhaar number.
  • Secured payment with Two Factor authentication.
  • Funds are transferred in real-time (i.e. immediately).
  • Available round the clock i.e. 24*365.
  • Allows both sending (making) payments and requesting (receiving) payments.

UPI123Pay 

  • UPI was available on smartphones and through National Unified USSD Platform (NUUP) using the short code of *99#. 
  • In March 2022, RBI had launched UPI123Pay to facilitate UPI payments for feature phone users in 3 steps (call, choose, pay) without the need for an internet. 
    • The feature phone user need to first link his / her bank account to the feature phone and set UPI PIN using his / her debit card details. 
    • The users can access UPI services on feature phones through 4 options – an app, by giving a missed call (incoming call received to authenticate the transaction by entering UPI PIN), by initiating a secured call to a pre-determined IVR number, or proximity sound-based devices. 
  • In October 2024, the per-transaction limit in UPI123Pay was enhanced from ₹5000 to ₹10,000.

Linking of Rupay Credit Cards to UPI

In June 2022, RBI permitted linking of RuPay credit cards to UPI. 

UPI Lite

  • In September 2022, small value transactions through an ‘on-device’ wallet in UPI application was enabled where users can transfer a maximum of ₹2,000 to UPI Lite with the wallet subsequently debited for transaction of up to ₹200, without the necessity of entering UPI PIN.
  • In August 2023, offline transactions using near field communication (NFC) technology were enabled in UPI Lite. 
  • In August 2023, per transaction limit for small value digital payments in offline mode through UPI Lite was increased from ₹200 to ₹500.
  • In December 2024, the limit for UPI Lite was enhanced to ₹1,000 per transaction with ₹5,000 being the total limit.
  • In August 2024, auto-replenishment facility was introduced for loading the UPI Lite wallet by the customer, if the balance goes below a threshold amount set by him / her, without the requirement of additional authentication or pre-debit notification. 

Processing Mandates with Single-Block-and-Multiple-Debits

  • UPI had the feature for processing mandated recurring transactions and single-block-and-single-debit which is used in initial public offer (IPO) subscriptions. 
  • In December 2022, RBI permitted the introduction of single-block-and-multiple debits functionality in UPI by enabling a customer to create a payment mandate against a merchant by blocking funds in his / her bank account for specific purposes which can be debited, whenever needed. 

UPI-PayNow linkage

In February 2023, RBI and the Monetary Authority of Singapore (MAS) operationalised linkage of their respective fast payment system, UPI and PayNow, enabling users of the two systems to make instant and low-cost cross-border peer-to-peer (P2P) payments.

  • Customers of the participating banks in India can undertake cross-border remittances to Singapore using the bank’s mobile banking app / internet banking.
  • An Indian user can remit up to ₹60,000 in a day (equivalent to around SGD 1,000). 
  • Only P2P remittances towards the purpose of “Maintenance of Relatives Abroad” & “Gift” under the Liberalised Remittance Scheme (LRS) are allowed, and the prescribed LRS limits are applicable.
  • Funds held in bank accounts or e-wallets can be transferred to / from India using just the UPI-id, mobile number, or Virtual Payment Address (VPA).

Conversational Payments enabled in UPI

In August 2023, ‘Conversational Payments’ were enabled in UPI to allow users to engage in conversation with an artificial intelligence (AI)-powered system to initiate and complete transactions. This channel is made available in both smartphones and feature phones-based UPI channels. 

Pre-sanctioned credit lines on UPI

  • In September 2023, the scope of UPI was expanded by enabling pre-sanctioned credit lines to be linked through UPI and used as a funding account by Scheduled Commercial Banks excluding Payments Banks, Small Finance Banks (SFBs) and Regional Rural Banks. 
  • SFBs will also be permitted to extend pre-sanctioned credit lines through the UPI. 

UPI Circle 

In August 2024, UPI Circle was launched to allow an individual (primary user) to set a UPI transaction limit for another individual (secondary user) on the primary user’s bank account. UPI Circle is a feature enabling UPI user to act as a primary user linking with trusted secondary users on UPI App for either partial or full delegation of payments.

UPI access for Prepaid Payment Instruments (PPIs) through third-party applications

  • UPI payments from / to a bank account can be carried out using the UPI application of that bank or of any third-party application provider. However, UPI payments from / to a PPI can only be carried out using the mobile application provided by the PPI issuer. 
  • In December 2024, UPI payments were enabled from / to full-KYC PPIs through third-party UPI applications. 

Enhancements in UPI transaction limits 

  • In March 2020, the UPI transaction limit for certain specific categories of transactions, such as capital markets, collections, insurance, and forward inward remittances was enhanced from ₹1 lakh to ₹2 lakh.
  • In December 2021, the transaction limit for payments through UPI for Retail Direct Scheme and IPO applications was increased from ₹2 lakh to ₹5 lakh.
  • In June 2022, RBI enhanced the per transaction limit for subsequent transactions (without Additional Factor of Authentication) undertaken under the e-mandate framework for processing of recurring transactions done using UPI from ₹5,000/- to ₹15,000/- per transaction. In December 2023, the limit was increased from ₹15,000/- to ₹1,00,000/- per transaction for the following categories – (a) subscription to mutual funds, (b) payment of insurance premiums, and (c) credit card bill payments.
  • In December 2023, RBI enhanced the limit for UPI payments made to hospitals and educational institutions from ₹1 lakh to ₹5 lakh per transaction.
  • In August 2024, the limit for tax payments through UPI was enhanced from ₹1 lakh to ₹5 lakh per transaction.

Acceptance of UPI across the world

  • In July 2021, acceptance of UPI through QR codes for merchant payments was enabled in Bhutan. 
  • Acceptance of UPI through QR codes was enabled in Singapore and the UAE. 
  • In February 2023, RBI permitted access to UPI by NRIs and foreign nationals (from G20 countries) for their merchant payments [peer-to-merchant (P2M)] in India. Issuance of PPIs to access UPI was allowed to foreign nationals from G20 countries visiting India.
  • In July 2023, RBI and the Central Bank of the UAE (CBUAE) signed a memorandum of understanding (MoU) for interlinking their payments infrastructure including linking their Fast Payment Systems [UPI of India with Instant Payment Platform (IPP) of UAE called Aani] and for linking their respective Card Switches (RuPay switch and UAESWITCH).
  • In February 2024, RuPay cards and UPI connectivity between India and Mauritius was launched. 
  • In February 2024, UPI connectivity between India and Sri Lanka was launched. 
  • In February 2024, RBI and Nepal Rastra Bank signed and exchanged Terms of Reference for integration of fast payment systems of India and Nepal, viz., UPI of India and National Payments Interface of Nepal, respectively. 
  • In February 2024, acceptance of UPI through QR codes for merchant payments in France (e-commerce) was launched.
  • In March 2024, acceptance of UPI through QR codes for merchant payments in Nepal went live.
  • Payments Vision Document 2025 has outlined expanding the global outreach of UPI and RuPay cards as one of the key objectives under the internationalisation pillar.

Cash withdrawal and cash deposit using UPI

  • In June 2022, Interoperable Card-less Cash Withdrawal (ICCW) transactions at ATMs using UPI for authorization were enabled. 
  • In August 2024, cash deposit facility using Cash Deposit Machines (CDMs) was enabled through use of UPI. 


References

National Payments Corporation of India. (2022, June 17). 'Enablement of Interoperable Card-less Cash Withdrawal (ICCW) transactions on NFS ATM Network using Unified Payments Interface (UPI) for authorisation'. Retrieved from https://www.npci.org.in/PDF/npci/upi/circular/2022/UPI-OC-150-Enablement-of-Interoperable-Card-less-Cash-withdrawal-ICCW-transactions-on-NFS-ATM-Network-using-unified-Payment-Interface-UPI-for-authorization.pdf

National Payments Corporation of India. (2024, August 16). 'Enablement of Interoperable Cash Deposit using UPI at Cash Deposit / Recycler Machines'. Retrieved from https://www.npci.org.in/PDF/npci/upi/circular/2024/UPI-OC-204-FY-24-25-Enablement-of-Interoperable-Cash-Deposit-using-UPI-at-Cash-Deposit-Recycler-Machines.pdf

National Payments Corporation of India. (2024, August 13). 'Introduction of "UPI Circle" - Delegated Payments for secondary users'. Retrieved from https://www.npci.org.in/PDF/npci/upi/circular/2024/UPI-OC-No-201-FY-24-25-Introduction-of-UPI%20Circle%E2%80%93Delegated-Payments-for-secondary-users.pdf

National Payments Corporation of India. (n.d.). 'NPCI - UPI Circulars'. Retrieved from https://www.npci.org.in/what-we-do/upi/circular

National Payments Corporation of India. (n.d.). 'Unified Payments Interface (UPI) Product Overview'. Retrieved from https://www.npci.org.in/what-we-do/upi/product-overview

National Payments Corporation of India. (n.d.). 'UPI FAQs'. Retrieved from https://www.npci.org.in/what-we-do/upi/faqs

Reserve Bank of India. (2020, March 03). 'Implementation of Rs.2 lakh limit for transaction for Speciofic Categories in UPI'. Retrieved from https://www.npci.org.in/PDF/npci/upi/circular/2020/UPI%20OC%2082%20-%20Implementation%20of%20Rs%20%202%20Lakh%20limit%20per%20transaction%20for%20specific%20categories%20in%20UPI.pdf

Reserve Bank of India. (2022, May 19). 'Interoperable Card-less Cash Withdrawal (ICCW) at ATMs'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12321&Mode=0

Reserve Bank of India. (2022, May 27). 'RBI Annual Report 2021-22 - Annex I: Chronology of Major Policy Announcements: April 2021 to March 2022'. Retrieved from https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1355

Reserve Bank of India. (2022, May 27). 'RBI Annual Report 2021-22 - IX. Payment and Settlement Systems and Information Technology'. Retrieved from https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1351

Reserve Bank of India. (2023, February 21). 'FAQ - UPI-PayNow Linkage'. Retrieved from https://www.rbi.org.in/Scripts/FAQView.aspx?Id=156

Reserve Bank of India. (2023, February 21). 'Honorable Prime Ministers of India and Singapore Launch Real-time Payment Systems Linkage between the Two Countries'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55260

Reserve Bank of India. (2023, December 12). 'Processing of e-mandates for recurring transactions'. Retrieved from https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12570&Mode=0

Reserve Bank of India. (2023, May 30). 'RBI Annual Report 2022-23 - Annex I: Chronology of Major Policy Announcements: April 2022 to March 2023'. Retrieved from https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1384

Reserve Bank of India. (2023, May 30). 'RBI Annual Report 2022-23 - IX. Payment and Settlement Systems and Information Technology'. Retrieved from https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1380

Reserve Bank of India. (2023, August 10). 'Statement on Developmental and Regulatory Policies'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=56174

Reserve Bank of India. (2024, December 04). 'Amendment to Framework for Facilitating Small Value Digital Payments in Offline Mode'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12752&Mode=0

Reserve Bank of India. (2024, May 30). 'RBI Annual Report 2023-24 - Annex I: Chronology of Major Policy Announcements - April 2023 to March 2024'. Retrieved from https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1413

Reserve Bank of India. (2024, May 30). 'RBI Annual Report 2023-24 - Annex III: Customer Centric Measures - April 2021 to March 2024'. Retrieved from https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1415

Reserve Bank of India. (2024, May 30). 'RBI Annual Report 2023-24 - IX. Payment and Settlement Systems and Information Technology'. Retrieved from https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1409

Reserve Bank of India. (2024, December 06). 'Statement on Developmental and Regulatory Policies'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=59245

Reserve Bank of India. (2024, October 09). 'Statement on Developmental and Regulatory Policies'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=58852

Reserve Bank of India. (2024, August 08). 'Statement on Developmental and Regulatory Policies'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=58449

Reserve Bank of India. (2024, June 07). 'Statement on Developmental and Regulatory Policies'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=58051

Reserve Bank of India. (2024, December 27). 'Unified Payments Interface (UPI) access for Prepaid Payment Instruments (PPIs) through third-party applications'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12756&Mode=0


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