New Delhi: The Reserve Bank of India (RBI) has approved a proposal allowing the National Payments Corporation of India (NPCI) to increase transaction limits for UPI-based person-to-merchant (P2M) payments, responding to evolving user and ecosystem needs.
The move marks a policy shift towards greater flexibility in UPI-based payments, especially for merchant transactions, with a focus on adapting to new use cases in the digital payment space.
UPI Cap Revised for P2M Use Cases
Currently, UPI transactions covering both person-to-person (P2P) and person-to-merchant (P2M) payments are capped at Rs 1 lakh. However, certain P2M categories, such as education and healthcare, already enjoy enhanced limits of Rs 2 lakh and Rs 5 lakh, respectively.
With the latest regulatory direction, NPCI can now re-evaluate and increase these thresholds for other merchant categories based on user demand and risk assessment.
The central bank clarified that individual banks can continue to set their internal limits, provided they remain within the boundaries set by NPCI.
Risk Safeguards and Operational Autonomy
RBI Governor Sanjay Malhotra stated that NPCI will revise limits in consultation with banks and stakeholders of the UPI ecosystem. “Risks related to higher limits will be managed through adequate safeguards,” he added. However, the existing Rs 1 lakh cap on P2P UPI transfers will remain unchanged for now.
The statement underscores the RBI’s cautious approach, balancing innovation in digital payments with regulatory prudence. The move also hints at future flexibility as more high-value use cases emerge in the P2M space.
