In a significant move to boost digital payment accessibility, the Reserve Bank of India (RBI) has increased the transaction limit for UPI 123Pay from ₹5,000 to ₹10,000 per transaction. This change, effective October 9, 2023, reflects RBI’s commitment to advancing financial inclusion and broadening the reach of digital payment systems. The National Payments Corporation of India (NPCI) has directed banks, public sector banks (PSBs), and service providers to implement these updates by January 1, 2025.

What Is UPI 123Pay?

UPI 123Pay is a feature-rich platform that allows users with feature phones to access UPI services without requiring an internet connection. This innovation bridges the digital divide, enabling millions of users without smartphones or stable internet access to participate in India’s growing digital economy.

The platform supports four key payment methods:

1. Interactive Voice Response (IVR) Numbers: Users can make payments by calling a designated number and following the voice-guided instructions.
2. Missed Call Services: Payments can be triggered by giving a missed call to pre-assigned numbers, which prompts authentication and transaction completion.
3. OEM-Embedded Apps: Feature phones with pre-installed UPI apps can facilitate payments and related services.
4. Sound-Based Technology: Transactions are enabled via ultrasonic sound waves for secure and quick payments.

These mechanisms make UPI 123Pay an inclusive payment system designed to serve the unconnected and underbanked population.

Key Changes to Be Implemented by January 1, 2025

1. Increased Transaction Limits

• The transaction cap for UPI 123Pay is being doubled, increasing from ₹5,000 to ₹10,000 per transaction. This allows users to conduct higher-value transactions, especially beneficial for small businesses, merchants, and high-value peer-to-peer transfers.

2. Aadhaar OTP Integration

• To enhance security and simplify the onboarding process, Aadhaar OTP authentication will be introduced for UPI 123Pay. This will make it easier for users to register and access UPI services securely.

3. Transaction Tagging and Identification

• New Purpose Code (Code 86): All UPI 123Pay transactions must include the newly assigned purpose code 86 in the purpose tag to classify financial and non-financial transactions accurately.
• Updated Initiation Modes: Previously used initiation mode “31” will be invalid. Banks and service providers must adhere to updated procedural guidelines for transaction initiation modes.
• Integration with UPI Numeric ID Mapper: UPI members are required to implement numeric ID functionality, ensuring seamless mapping and processing of numeric identifiers in UPI transactions.

4. Expanded UPI Lite Wallet Limits

• As part of a broader strategy, the RBI has also raised the UPI Lite wallet balance limit from ₹2,000 to ₹5,000 and the per-transaction limit from ₹500 to ₹1,000. UPI Lite, designed for small-value offline transactions, further complements the overall UPI ecosystem.

Why These Changes Are Significant

Driving Financial Inclusion

With over 300 million feature phone users in India, UPI 123Pay plays a pivotal role in bringing the benefits of digital payments to underserved communities, particularly in rural and semi-urban areas. By raising the transaction limit and integrating Aadhaar OTP, the system becomes more robust and accessible.

Promoting Higher-Value Transactions

The increased transaction limit will encourage broader adoption among merchants and users, facilitating higher-value transactions and supporting small businesses.

Strengthening Security and Compliance

New tagging protocols, numeric ID mapping, and procedural updates are designed to enhance transaction accuracy, reduce errors, and strengthen security. These measures will streamline the process for users and service providers alike.

RBI’s Vision for UPI

RBI Governor Shaktikanta Das emphasized the transformative role of UPI in reshaping India’s financial landscape. By making digital payments more inclusive, accessible, and secure, UPI has become a cornerstone of India’s digital economy.

Das highlighted that the latest updates, including the expanded UPI Lite wallet limits, align with the vision to promote innovation and encourage adoption of UPI services across demographics. These steps aim to further deepen the reach of digital payments and ensure financial inclusivity at scale.

What Lies Ahead

The implementation deadline of January 1, 2025, provides sufficient time for stakeholders, including banks, PSBs, and service providers, to adapt their systems and comply with the new guidelines. The combined updates for UPI 123Pay and UPI Lite underline the RBI’s commitment to fostering a comprehensive digital payment ecosystem, ensuring no user is left behind.

These developments mark a significant step toward empowering every Indian with the tools to participate in the country’s rapidly growing digital economy.

Paytm Unveils International UPI Payments: Revolutionizing Global Transactions for Indian Travelers

Paytm, a leader in digital payments and operated by One97 Communications Limited (OCL), has launched its International UPI payment feature, marking a pivotal step in diversifying its services beyond India. This groundbreaking initiative allows Indian travelers to conduct seamless, cashless transactions in multiple global destinations where UPI (Unified Payments Interface) is accepted. Countries currently supporting this feature include the UAE, Singapore, France, Mauritius, Bhutan, and Nepal.

The introduction of International UPI aligns with Paytm’s mission to innovate and enhance user convenience. As international travel continues to grow, this feature eliminates the need for physical currency exchanges, making it easier for Indian travelers to pay for goods and services abroad.

What is Paytm’s International UPI, and How Does It Work?

Paytm’s International UPI operates with the same simplicity and efficiency as domestic UPI payments. Users can activate the feature effortlessly by linking their bank accounts. When travelers scan a UPI-enabled QR code abroad and opt to pay using UPI, the Paytm app prompts them to activate the international payment feature instantly.

The setup process is straightforward, requiring just a few taps, and ensures that users have immediate access to international UPI transactions. This convenience means travelers can confidently shop, dine, or explore without the hassle of cash or international credit card fees.

Key Features and Benefits

1. Seamless Activation and Usage:
   Users can enable the international UPI feature quickly through the app. Once activated, transactions can be completed with the same ease as domestic payments.
2. Customizable Usage Periods:
   To enhance security, travelers can set a usage duration for international UPI payments, ranging from 1 to 90 days. The feature automatically deactivates after the selected period, safeguarding against accidental use.
3. Transparent Costs:
   Before confirming a transaction, users can view precise foreign exchange rates and any associated bank charges. This ensures clarity and eliminates surprises.
4. Enhanced Security:
   The system prevents accidental payments to foreign merchants after the user has returned to India, offering better control over financial transactions.
5. Integrated Spending Tracking:
   Alongside the international UPI launch, Paytm has introduced a UPI statement download feature, allowing users to review their spending with detailed transaction records.

A Visionary Move for the Digital Payment Ecosystem

A Paytm spokesperson underscored the importance of this feature in a recent statement:
“As pioneers in mobile payments, our focus remains on providing innovative solutions that bring greater convenience to our users. UPI International allows Indian travelers to make secure, cashless payments in global destinations like the UAE, Singapore, France, Mauritius, Bhutan, and Nepal. With the upcoming holiday season, this launch is poised to make foreign travel smoother and more enjoyable for millions.”

This move positions Paytm as a forerunner in adapting India’s widely-used UPI system for global utility. By enabling international UPI transactions, Paytm extends the benefits of cashless payments beyond domestic borders, empowering Indian travelers with greater financial freedom and convenience.

The Broader Implications for Indian Travelers

With this update, Indian travelers no longer need to rely on cash or expensive international credit cards for foreign transactions. The feature is particularly useful for shopping, dining, transportation, and other activities while traveling. The ability to deactivate the feature after the trip also ensures enhanced security and peace of mind.

Additionally, the transparency offered through real-time foreign exchange rates and bank fee disclosures helps travelers manage their budgets more effectively. This is a significant step in eliminating the unpredictability often associated with international payments.

Impact on Paytm’s Market Performance

The announcement of this innovative feature has positively impacted the performance of One97 Communications Ltd., Paytm’s parent company, in the stock market. Shares opened at ₹787 on the Bombay Stock Exchange (BSE) and rose by 3.62%, trading at ₹812.25.

The stock has seen a 4.47% increase over the past five days, demonstrating resilience amidst market volatility. Over the last month, it has posted impressive growth of 11.61%. Analysts predict that the International UPI feature could further drive Paytm’s growth, strengthening its position as a leader in digital payment solutions.

A Game-Changer for Indian Travelers and Paytm

Paytm’s International UPI launch marks a transformative milestone for Indian travelers and the broader payments ecosystem. By enabling cashless, secure, and convenient transactions abroad, Paytm is not just expanding its service portfolio but also setting a new benchmark in digital innovation.

As global travel becomes increasingly accessible, this feature ensures Indian users are equipped with cutting-edge financial tools, making Paytm an essential companion for both domestic and international journeys. With continued innovations, Paytm is well-positioned to lead the charge in shaping the future of digital payments globally.

Currently, the Unified Payments Interface (UPI) is operational in seven countries: France, the UAE, Singapore, Bhutan, Sri Lanka, Mauritius, and Nepal. The National Payments Corporation of India (NPCI), which oversees the UPI and RuPay services, is now in discussions with 10 additional countries to expand its digital payment footprint across the globe.

Dilip Asbe, the Managing Director and CEO of NPCI, shared these updates during his address at the 11th SBI Banking & Economics Conclave. He mentioned that while UPI has made significant strides internationally, the work is far from complete. “For UPI, we’ve signed agreements with three countries, but the implementation may take a few more weeks,” Asbe explained. He further added that commercial agreements have already been signed with Namibia, Trinidad and Tobago, and Peru, signaling growing interest from international markets in adopting India’s payment infrastructure. “There’s much work left in terms of globalizing the UPI and RuPay stack,” Asbe continued. “At this point, five to six countries have officially signed up, and another 10 countries are in active discussions with us.”

Asbe emphasized the challenges involved in expanding UPI and RuPay globally, particularly in terms of technical infrastructure, regulatory alignment, and market adoption. Nevertheless, he expressed optimism about the future and the potential to scale UPI and RuPay across multiple regions.

Since its launch in 2016, UPI has drastically improved its performance, especially in terms of transaction success rates. Asbe highlighted the significant reduction in transaction failure rates over the years, underscoring the robustness of the platform. “The technical decline rates have reduced to 0.7-0.8% from a high of 8-10% in 2016,” he said. This improvement has been crucial to maintaining UPI’s reliability and supporting its rapid growth in India and abroad.

In terms of adoption and transaction volumes, UPI has seen impressive growth. According to the latest data from NPCI, the average daily transaction count exceeded 500 million in September 2024, marking a significant jump from 483 million in August 2024. The total value of transactions processed by UPI in September reached an astounding Rs 20.64 lakh crore, with 15.04 billion transactions being processed that month. This rapid growth is a clear indication of UPI’s increasing role in India’s digital economy, as over 400 million people in the country now rely on UPI for real-time payments.

Looking ahead, Asbe also spoke about the evolving nature of the payment ecosystem in India, with a particular focus on UPI Lite. UPI Lite is designed to handle small-value transactions without the need for a UPI PIN, making it easier for users to make quick, low-cost payments. Asbe stated that the industry is actively working towards migrating low-ticket transactions to UPI Lite. “The strategy is to move small payments to UPI Lite as time passes,” he said. This initiative is aligned with the growing need for efficient payment solutions that cater to everyday, low-value transactions.

The Reserve Bank of India (RBI) has also supported this shift by raising the limits for UPI Lite wallets. In October 2024, the RBI doubled the per-transaction cap for UPI Lite from Rs 500 to Rs 1,000 and increased the overall wallet limit from Rs 2,000 to Rs 5,000. These changes are expected to further boost the adoption of UPI Lite, making it a convenient option for users looking to make small transactions seamlessly and securely.

NPCI’s continued efforts to expand UPI and RuPay internationally and enhance the domestic payment ecosystem reflect its ambition to make India a global leader in digital payments. By scaling these platforms to new markets and innovating solutions for small payments, NPCI aims to support both financial inclusion and global economic connectivity.

Yes Bank has partnered with Vegapay, a leading technology provider in banking software, to launch a hyper-configurable platform called Credit Line on UPI, according to a press release by Vegapay. This platform enables Yes Bank to create tailored credit programs to meet diverse customer needs. Through the platform, the bank can decide whether to offer interest-free or interest-bearing credit, allow installment payments (EMIs), and establish rules for different scenarios using an intuitive interface.

The solution includes a customizable app and a user-friendly dashboard, simplifying integration with existing banking systems. Rajan Pental, Executive Director of Yes Bank, commented on the initiative, stating, “UPI has transformed digital payments in India, but there is still a gap in providing formal credit access to a broader audience. Yes Bank processes one in every three digital payment transactions in India, reinforcing its leadership in the UPI ecosystem. With Credit Line on UPI, we aim to bridge this gap and enable a credit-driven future for millions of Indians. Our partnership with Vegapay provides us with a robust platform that meets security and compliance standards while delivering seamless credit solutions.”

The collaboration seeks to redefine credit access in India, empowering banks to deliver modern credit experiences to millions of customers.

UPI has become the backbone of India’s digital payments ecosystem, with over 350 million active users and more than 14 billion monthly transactions. Despite this growth, formal credit access remains limited, with only 15-20% of users owning credit cards. As UPI transactions are projected to grow at an annual rate of 57% through FY 2024, the market for UPI-linked credit products is expected to exceed $50 billion by 2025.

By leveraging UPI’s extensive reach, the partnership between Yes Bank and Vegapay aims to address this gap, offering flexible and accessible credit solutions. Nalin Bansal, Chief of Fintechs, Corporates, and Key Initiatives at NPCI, praised the collaboration, highlighting Vegapay’s swift execution and technological innovation. He stated, “Vegapay’s Credit Line on UPI platform, launched through the NPCI Partner Program, sets a benchmark for the industry. This seamless partnership between Yes Bank and Vegapay will drive financial inclusion and enhance the credit experience for both existing and new banking customers.”

The move underscores a growing trend among leading banks like Yes Bank to explore UPI-linked credit offerings, responding to the rising demand for flexible, modern financial solutions.

Indian travelers now have access to a revolutionary cashless payment solution abroad with the launch of Paytm’s Unified Payments Interface (UPI) International service. One97 Communications Limited (OCL), the parent company of Paytm, has introduced this innovative feature to make international transactions smoother and more convenient for Indian users.

With UPI International, Indian users can make seamless payments at various international locations without the need for foreign exchange or carrying physical cash. The service currently supports payments in countries such as the UAE, France, Singapore, Mauritius, Bhutan, and Nepal, where UPI is accepted by merchants. This development is particularly beneficial for Indian tourists, students, and business travelers, providing them with a hassle-free and secure way to pay for goods and services abroad.

This feature aligns with the global expansion of UPI, which has gained recognition as a fast, reliable, and secure digital payment system. By integrating UPI with international merchants, Paytm is not only simplifying payments for its users but also contributing to the broader adoption of Indian digital payment technologies on a global scale. The move highlights India’s leadership in the digital payments landscape and its ambition to promote indigenous financial technologies worldwide.

The UPI International feature also includes enhanced security protocols to ensure safe transactions, offering Indian users peace of mind while making payments in foreign countries. Paytm’s user-friendly interface and widespread adoption within India make it easier for users to transition to using UPI internationally, bridging the gap between domestic and global payment ecosystems.

This launch is a significant step towards achieving a truly global cashless economy, reflecting the growing acceptance of digital payments worldwide. Paytm’s commitment to innovation and its focus on providing convenience to its users continues to redefine the way payments are made, whether at home or abroad.