RBI Approves Higher UPI Payment Limits for Person-to-Merchant Deals

In a significant move for India’s digital payment ecosystem, the Reserve Bank of India (RBI) has allowed the National Payments Corporation of India (NPCI) to increase transaction limits for person-to-merchant (P2M) payments made through the Unified Payments Interface (UPI). This decision reflects RBI’s commitment to meet evolving user needs and support smoother digital transactions in the growing retail market.

Why the Change Matters?

UPI transactions are generally limited to ₹1 lakh for both P2P and P2M payments. However, certain P2M use cases already permit higher limits of ₹2 lakh or ₹5 lakh. Now, with the latest update, NPCI has been permitted to revise and raise the transaction limits for P2M payments based on ongoing feedback and emerging user trends.

This flexibility is designed to help the payment ecosystem adapt quickly to new demands without waiting for fresh RBI approvals every time a limit change is needed.

What Is NPCI’s Role in This?

The National Payments Corporation of India (NPCI) is the backbone of UPI and other retail payment systems in India. It has now been authorised by the RBI to work with banks and payment service providers to define new transaction ceilings for P2M payments.

RBI Governor Sanjay Malhotra mentioned that NPCI can adjust the limits after consulting with all stakeholders involved in the UPI ecosystem. However, banks will still have the discretion to apply internal limits within the upper limit set by NPCI, ensuring a balanced approach to risk management.

What About Person-to-Person Payments?

While P2M payment limits can now be revised upwards, RBI has clarified that P2P transactions through UPI will continue to remain capped at ₹1 lakh. This means only payments made to merchants—like online shops, local stores, and service providers—can benefit from higher UPI payment limits.

Safe Payments Remain a Priority

To ensure that the increased transaction limits do not lead to misuse or fraud, appropriate safeguards will be introduced. These measures aim to manage risks effectively while giving users the freedom to make larger payments when necessary.

A Step Forward for Digital India

This decision by the RBI is expected to benefit millions of merchants, especially those operating in sectors like healthcare, education, or travel, where high-value digital payments are common. It also reflects India’s ongoing push towards a cashless economy and a more adaptable digital payments infrastructure.

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