RBI eases UPI rules to enable high-value merchant payments

By Puja Sharma

The Reserve Bank of India (RBI) has introduced a significant update to its Unified Payments Interface (UPI) framework by allowing banks and payment service providers more control over transaction limits for in-person payments at merchant outlets. Under the new guidelines, financial institutions can set their transaction caps for UPI-based payments at physical stores, provided they stay within the overarching limit defined by the RBI.

This strategic shift aims to boost the adoption and ease of digital payments, particularly among small and medium-sized enterprises (SMEs), by enabling higher-value transactions without the need to split them into smaller payments. The flexibility is expected to be a major enabler for merchants and customers alike, especially in sectors where higher transaction values are common.

At the same time, the RBI has reiterated the critical importance of maintaining strong security protocols. As institutions gain more autonomy in setting these limits, they must also ensure that their systems are equipped with adequate safeguards to prevent fraud and protect user data.

The move reflects the RBI’s broader mission to accelerate India’s transition towards a less-cash economy by enhancing the country’s digital payments ecosystem. By empowering service providers to align transaction limits with their risk profiles and user needs, the central bank is fostering a more adaptive and resilient payment infrastructure.

This regulatory change is likely to spur greater innovation and responsiveness in the digital payments landscape. It reinforces the RBI’s commitment to building a secure, scalable, and user-centric financial ecosystem that supports economic growth and digital inclusion. Ultimately, this initiative is expected to contribute meaningfully to the continued rise in digital transaction volumes across India.

The Payments Council of India (PCI) has issued a statement welcoming the RBI’s latest proposal to enhance flexibility in UPI transaction limits, a move that is expected to unlock more high-value digital use cases and further strengthen India’s digital payments ecosystem.

The Payments Council of India (PCI), the representative body of payment system participants in India, wholeheartedly welcomes the Reserve Bank of India’s (RBI) latest announcement on developmental and regulatory policies, particularly the proposal to enhance transaction limits in the Unified Payments Interface (UPI) system.

The RBI has proposed that the National Payments Corporation of India (NPCI), in consultation with banks and other stakeholders, be empowered to determine and revise UPI transaction limits based on evolving user needs, use cases, and risk considerations. This move is expected to bring greater flexibility and responsiveness to the ever-expanding digital payments ecosystem in India.

Vishwas Patel, Jt. MD, Infibeam Avenues, and Chairman of the Payments Council of India (PCI) said, “RBI’s move to empower NPCI to revise UPI transaction limits for merchant payments is a much-needed and welcome reform. It reflects a deep understanding of the changing needs of users and businesses alike. This flexibility will allow the ecosystem to cater to more high-value use cases like insurance premiums, education fees, and B2B transactions while still upholding safety. It’s a win-win for consumers, merchants, and payments players. We at PCI fully support this initiative and will work with all stakeholders to ensure its effective implementation”

The Payments Council of India reiterates its commitment to supporting innovation and building a robust, inclusive, and secure digital payments framework aligned with India’s goal of a cash-light economy.