UPI rule change: Transaction limit hike to enhanced features – UPI 123Pay upgrade from 2025

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In a significant move to boost digital financial inclusion, the Reserve Bank of India (RBI) on October 9 increased the transaction limit for UPI 123Pay from Rs 5,000 to Rs 10,000. UPI 123Pay is a transformative tool that enables feature phone users to access UPI services without an internet connection, fostering financial accessibility for millions of Indians.

Following this, the National Payments Corporation of India (NPCI) issued a circular directing banks, public sector banks (PSBs), and service providers to ensure adherence to the new limits. These measures, while effective immediately, must be fully implemented by January 1, 2025.

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What is UPI 123PAY?

UPI 123PAY is an instant payment solution for feature phone users that allows them to utilise the Unified Payments Interface (UPI) payment service safely and securely. UPI 123PAY allows feature phone users to conduct a variety of transactions using four different technologies. They include phoning an IVR (interactive voice response) number, app capability in feature phones, missed call-based method, as well as proximity sound-based payments.

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Key Changes Introduced by NPCI

To streamline and enhance the UPI 123Pay ecosystem, NPCI has mandated the following updates for members:

1. Transaction Limit Increase: The maximum limit per transaction has been raised to Rs 10,000.
2. Aadhaar-Based Onboarding: Users will now onboard with Aadhaar OTPs to enhance security.
3. Purpose Codes for 123Pay Transactions: A new purpose code “86” has been introduced for tagging UPI 123Pay transactions.

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Additionally, changes to initiation modes were outlined:

• IVR-based payments:
• Feature-phone apps:
• Missed call-based payments:
• Sound-frequency technology:

UPI Lite Wallets Also See Updates

In another major announcement, RBI has increased the UPI Lite wallet limit from Rs 2,000 to Rs 5,000, and the individual transaction limit from Rs 500 to Rs 1,000.