UPI Changes in 2024 You Must Be Aware of

The National Payments Corporation of India (NPCI) has requested payment applications such as Google Pay, Paytm, PhonePe, as well as banks, to disable UPI IDs and numbers that have remained inactive for over a year. This directive, issued to all UPI members on November 7, 2023, aims to prevent unintended money transfers in cases where customers change their mobile numbers without dissociating their old numbers from the banking system, as the old mobile number may be reassigned to a new user. According to the new guidelines, Third-Party App Providers (TPAP) and Payment Service Providers (PSP) are required to implement these measures by December 31, 2023.

As per the recent guidelines, the Third-Party App Providers (TPAP) and Payment Service Providers (PSP) are required to take the following actions and implement them by December 31, 2023:

- Identify UPI IDs, associated UPI numbers, and phone numbers of customers who have not engaged in any financial (debit or credit) or non-financial transactions through UPI apps for a period of 1 year.

- Disable UPI IDs and UPI numbers for customers with no transaction activity for inward credit transactions. Additionally, PSPs must deregister the corresponding phone numbers from the UPI mapper.

- Customers with disabled UPI IDs and phone numbers for inward credit transactions should re-register in their UPI apps for UPI mapper linkage. These customers can then make payments and perform non-financial transactions using their UPI PIN as necessary.

- UPI apps are required to conduct Requester Validation (ReqValAd) before initiating 'Pay-to-contact' and 'Pay to mobile number.' The apps should display the customer's name fetched before initiating the transaction and refrain from displaying the name stored at the app's end.

In order to improve the security of digital transactions, particularly those involving recurring online payments, the Reserve Bank of India (RBI) has required the implementation of an Additional Factor of Authentication (AFA) for processing e-mandates. Nevertheless, to offer greater convenience to customers, the upper limits for executing e-mandates without AFA have been retained at Rs 15,000. Notably, some of the most significant recurring transactions often pertain to savings and insurance, encompassing payments for mutual fund subscriptions, insurance premiums, and credit card bills. Recognising this, the threshold for these three transactions has been raised to Rs 1 lakh.

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Announcing the bi-monthly monetary policy for December, Reserve Bank Governor Shaktikanta Das revealed that the limits for various categories of Unified Payments Interface (UPI) transactions have been periodically reassessed. He mentioned the proposal to increase the UPI transaction limit for payments to hospitals and educational institutions from Rs 1 lakh to Rs 5 lakh per transaction. This limit is intended to facilitate UPI payments for higher amounts, specifically for education and healthcare expenses.

In an effort to combat the increasing occurrences of online payment fraud, the government is considering the implementation of a minimum time requirement for the first transaction between two individuals, especially for transactions exceeding Rs 2,000. The plan suggests the introduction of a potential 4-hour timeframe for processing the first digital payment transaction between two users. Although this process is expected to introduce some level of complexity to digital payments, and vendors may not accept such UPI payments, it is imperative to address cybersecurity concerns.

It is essential to note that the intention behind the plan is not solely to delay or restrict the first transaction upon account creation, as is already practised to some extent across most digital payment platforms. Instead, the aim is to regulate every initial transaction between two users, regardless of their independent transaction histories. While potentially introducing some friction to digital payments, officials see the process as a necessary step to improve cybersecurity.

This measure could encompass a broad spectrum of digital payment methods, including those facilitated through Immediate Payment Service (IMPS), Real Time Gross Settlement (RTGS), and the Unified Payments Interface (UPI).

For example, currently, when a user opens a new UPI account, they can send a maximum of Rs 5,000 within the first 24 hours. Similarly, in the case of National Electronic Funds Transfer (NEFT), a maximum of Rs 50,000 (either in full or in parts) can be transferred within the first 24 hours after activating a beneficiary. However, according to the new plan, a 4-hour time limit would be applicable whenever a user initiates the first payment exceeding Rs 2,000 to another user with whom they have not previously transacted.

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Furthermore, unveiled at the Global Fintech Fest 2023 in Mumbai on September 5, 2023, the Hitachi Money Spot UPI ATM represents a significant advancement in financial technology. With the widespread deployment of these UPI ATMs, the need to carry debit or credit cards to traditional ATMs for cash withdrawals will become obsolete. The UPI-ATM will facilitate cash withdrawal from bank accounts through UPI applications, offering a user-friendly, secure, and convenient experience. Here is a step-by-step guide on how to withdraw money using a UPI ATM:

i. Select the desired withdrawal amount from the ATM.

ii. A QR code corresponding to the chosen amount will be presented on the screen.

iii. Use any UPI app available on your mobile phone to scan the displayed QR code.

iv. Input your UPI PIN on your mobile device to authorise the transaction.

v. Once the transaction is authorised, the ATM will dispense the requested cash.

Moreover, the NPCI is actively implementing the 'UPI Tap and Pay' feature across various digital payment providers. The NPCI has announced in a circular that UPI members have the option to implement the 'Tap & Pay' feature by January 31, 2024. It's important to highlight that this deadline is a suggested timeframe for digital payment companies, allowing flexibility for potential delays in the rollout of the feature.

To conclude:

With revised transaction limits and heightened security protocols, users are poised to experience a more efficient and secure UPI ecosystem. Staying informed of these changes is paramount for anyone navigating the digital financial landscape. As we embrace these advancements, it becomes clear that UPI is not just adapting to emerging trends but is actively shaping the future of seamless, secure, and user-friendly transactions. The evolving UPI framework is a testament to the ongoing commitment to enhancing the user experience and fostering a robust digital payment ecosystem in the years to come.

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KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

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