The Reserve Bank of India (RBI) has taken significant steps to boost digital transactions across the country by increasing transaction limits for UPI services. The recent changes in UPI Lite Wallet and UPI 123Pay limits aim to enhance the ease of use for digital payment users, especially in rural and remote areas. This move will further support India’s fast-growing digital payments landscape.
UPI Lite Wallet Limit Increased to Rs. 5,000
One of the key updates from RBI’s latest Monetary Policy Committee (MPC) meeting is the increase in UPI Lite Wallet’s transaction limit. Users can now send up to Rs. 5,000 in a single transaction, up from the previous limit of Rs. 2,000. UPI Lite is designed for small payments, making it easier for everyday transactions, especially for small merchants and customers.
This increase will simplify payments for users who rely on UPI Lite for making quick payments, such as grocery shopping, paying utility bills, or dining at small eateries. The per-transaction limit for UPI Lite has also been raised from Rs. 100 to Rs. 500, giving users more flexibility in their daily digital transactions.
UPI 123Pay Transaction Limit Raised to Rs. 10,000
UPI 123Pay, which allows users to make UPI transactions without the need for an internet connection, has also seen its per transaction limit increase. Previously capped at Rs. 5,000, UPI 123Pay now allows feature phone users to send up to Rs. 10,000 in a single transaction.
Launched in 2022, UPI 123Pay was specifically designed for India’s feature phone users, ensuring digital payments reach over 40 crore people who do not have access to smartphones or a stable internet connection. This change will help increase financial inclusion and make digital transactions more accessible across India.
Stable Repo Rate & Digital Payment Growth
In addition to the UPI changes, RBI has decided to keep the key interest rate (repo rate) stable at 6.5% for the tenth consecutive time. This decision has been taken to ensure economic stability while the country continues to recover from various global challenges.
Along with maintaining stability, RBI has focused on developing India’s digital economy. Digital payment systems like UPI Lite and UPI 123Pay are playing a critical role in driving financial inclusion in rural areas. With the increased transaction limits, more people, including small merchants and feature phone users, can now benefit from these services.
Increased UPI Usage for Tax Payments
Another major announcement from RBI was the increase in the UPI limit for tax payments. In August 2024, the limit for tax payments made via UPI was raised from Rs. 1 lakh to Rs. 5 lakh. This move will simplify the tax payment process for individuals and businesses, making large tax transactions easier to manage.
Impact on India’s Digital Economy
According to a report by PwC India, UPI transactions are expected to see massive growth, reaching an estimated 439 billion by 2028-29. In comparison, the last financial year saw around 131 billion UPI transactions. This three-fold growth indicates that India’s digital payment ecosystem is evolving at a rapid pace, driven by user-friendly payment solutions like UPI.
This growth in digital payments will not only impact urban areas but will also help bridge the financial gap in rural India. Services like UPI Lite and UPI 123Pay are vital in connecting people in remote areas with the benefits of digital payments, ensuring financial inclusion for all.
Towards a Digital Future
The increase in transaction limits for UPI Lite Wallet and UPI 123Pay is a significant step toward making digital payments easier and more convenient for every Indian. As the country continues to advance in its digital journey, these enhancements in the UPI system will ensure a smoother, more secure, and inclusive financial system for everyone. With the RBI and the government working closely to develop India’s digital infrastructure, these updates show the country’s commitment to fostering a robust and inclusive digital economy.
