As February 2025 begins, a series of significant regulatory changes are now in effect, reshaping how customers interact with banking and financial services. These changes, effective from February 1, 2025, cover a broad range of financial activities, including ATM withdrawals, Unified Payments Interface (upi) transactions, and other core banking services. Consumers are encouraged to be aware of these updates, as they could impact everything from digital payments to daily banking operations.

Key Financial Changes in February

UPI Transaction ID Update

Effective February 1, 2025, the National Payments Corporation of India (NPCI) has introduced a new mandate that all Unified Payments Interface (upi) transaction IDs must be alphanumeric. This change aims to enhance the standardization and security of UPI transactions, ensuring they are easier to track and process. By adopting a uniform format, the NPCI hopes to improve the clarity and consistency of UPI transactions. As a result, transactions that don’t comply with the new alphanumeric format will be automatically rejected by the system. This means users must ensure that their UPI apps are updated and in compliance with the new format to avoid any disruption in their transactions.

Revised Minimum Balance Requirements

Several major banks have revised their minimum balance requirements for savings accounts, with penalties now applicable for customers who fall below the new thresholds. These changes affect both urban and rural banking customers:

• State Bank of India (SBI) has increased its minimum balance requirement to Rs 5,000 (up from Rs 3,000).
• Punjab National Bank (PNB) now mandates a minimum balance of Rs 3,500 (up from Rs 1,000).
• Canara Bank has raised its minimum balance requirement to Rs 2,500 (up from Rs 1,000).
  Account holders failing to maintain the required balance will incur penalty charges. These changes may affect customers who are used to maintaining lower balances in their savings accounts, so it’s important to check account terms and stay updated to avoid penalties.

Kotak Mahindra Bank 811 Savings Account Updates

Effective February 1, 2025, Kotak Mahindra Bank has revised its 811 digital savings account policies. These changes are primarily focused on fees for transactions such as cash deposits and ATM withdrawals:

• Cash deposits exceeding Rs 10,000 per month will now incur a fee of Rs 5 per Rs 1,000, with a minimum charge of Rs 50.
• The ATM decline fee will now apply only for non-Kotak ATMs, charging Rs 25 per declined transaction.
• The standing instruction failure fee has been reduced from Rs 200 to Rs 100.
  These changes make it important for Kotak Mahindra 811 account holders to plan their transactions and avoid unnecessary charges. Regularly reviewing the terms and conditions of the savings account could help customers better manage fees and make the most of their banking experience.

IDFC FIRST Credit Card Changes

IDFC FIRST Bank has also introduced several updates to its credit card offerings, which will take effect from February 20, 2025. The changes mainly affect fees and services related to payments and card replacements:

• Revised Statement Dates: The statement dates will now be revised, and customers will need to be aware of the new billing cycle.
• New Fees on Education Payments: Payments made for educational expenses through platforms such as CRED and PayTM will now attract additional fees.
• Card Replacement Fee: The fee for replacing a lost or damaged IDFC FIRST credit card will now be Rs 199, plus applicable taxes.
• Joining and Annual Fees: A joining fee and annual fee of Rs 499 (plus taxes) will be introduced, effective after February 20, 2025.
  Credit cardholders are advised to check their accounts for the updated fees and ensure they are aware of the new charges for education payments, as this could impact payments made through third-party platforms.

RBI Monetary Policy Review on February 7

The Reserve Bank of India’s (RBI) Monetary Policy Committee will convene between February 5-7, 2025. Market experts are anticipating a potential cut in the repo rate, which would lower the interest rates at which commercial banks borrow from the central bank. This change would directly influence the rates for loans, mortgages, and deposits across all banks. If the RBI decides to reduce the repo rate, it could make borrowing cheaper, benefiting consumers who are looking to take out loans or credit, while savers may see lower returns on their fixed deposits and savings accounts. The RBI’s decision could also have an impact on inflation and the overall economic outlook, making it an important development for financial markets and consumers alike.

Why Staying Informed Matters

These regulatory changes signal a shift in the landscape of personal finance and banking in India, and it’s essential for consumers to stay informed about how these adjustments may affect their day-to-day transactions. From revised fees and charges to new standards in digital payments, being aware of the updates can help individuals plan their financial activities more effectively and avoid unnecessary penalties or surprises. As India continues to evolve in its digital banking and payment systems, such changes are expected to play a key role in streamlining financial services for users across the country.

MobiKwik Shifts Focus to UPI Expansion and RuPay Credit Card Launch to Boost Growth

Fintech platform MobiKwik is strengthening its focus on scaling its UPI (Unified Payments Interface) business and preparing to launch a RuPay credit card to the public as part of its strategy to drive long-term growth. Upasana Taku, the executive director, co-founder, and CFO of MobiKwik, emphasized these priorities during the company’s analyst call following its Q3 FY25 earnings report.

“The IPO provided us with ₹572 crore, and we are strategically planning its allocation to double down on existing business lines while investing in new ones that offer long-term growth potential,” Taku explained. She noted that the company is adopting a prudent approach to resource allocation, focusing on opportunities that will enhance operational efficiency and future profitability.

Financial Performance and Market Dynamics

MobiKwik reported a quarterly loss of ₹55 crore in Q3 FY25, a decline from the ₹5 crore profit it registered during the same period in Q3 FY24. However, revenue from operations grew to ₹269 crore in Q3 FY25, up from ₹229 crore year-over-year. For the nine months of FY25, the company generated ₹346 crore in revenue, surpassing its full-year FY24 figure of ₹317 crore.

Despite the short-term losses, MobiKwik remains optimistic. “We see green shoots, and we expect disbursals will come back to the same level as FY24, which will result in stronger margins and bottom-line performance in the quarters to come,” Taku said.

The company’s payments business grew by an impressive 166% in Q3 FY25, generating ₹196.5 crore in revenue. Taku highlighted a notable shift in revenue composition, with 73% of revenue in the first nine months of FY25 coming from payments, compared to 70% from financial product distribution in the previous year.

UPI and RuPay Credit Card Initiatives

To capitalize on the booming digital payments market, MobiKwik is aggressively expanding its UPI offerings. The company is focusing on scaling up Pocket UPI and credit card payments on UPI to drive growth. Pocket UPI allows users to make prepaid payments or pay with their wallet on any UPI QR code deployed by banks or payment companies. With MDR (merchant discount rates) attached to these transactions, it offers a potential revenue stream for the company.

“We started scaling up these products in 2024 and are already witnessing strong growth. Pocket UPI and credit card payments on UPI are critical for our growth trajectory,” Taku noted.

MobiKwik’s co-branded RuPay credit card, currently in beta on the MobiKwik app, is expected to be launched publicly soon. “This RuPay credit card will enable us to offer small-ticket credit for everyday spending on UPI, and it is also an MDR-generating product,” Taku said, emphasizing its potential to create a steady revenue stream.

Credit, Savings, and Insurance Expansion

On the lending side, MobiKwik is focused on balancing its credit distribution portfolio by introducing secured products, exploring new commercial models, and partnering with additional lending institutions. The company is scaling down its MobiKwik Zip product due to reduced lending partner appetite for small-ticket credit offerings but remains optimistic about the long-term potential of financial product distribution.

To enhance its offerings in savings and insurance, MobiKwik has made significant investments in Lens.ai, a digital advisory platform. “We are positioning Lens.ai as a digital advisor for the Markets of India, helping users invest via the MobiKwik app into mutual funds, fixed deposits, digital gold, and other financial products we plan to add,” Taku shared. Additionally, the company plans to launch its insurance distribution services later this year.

Strategic Partnerships and Industry Trends

MobiKwik recently partnered with Piramal Finance to offer personal loans, signaling its intent to diversify credit offerings despite scaling back Zip. This shift aligns with broader fintech trends, where companies are moving away from high-risk, small-ticket loans in favor of more stable and quality-focused credit products.

Appalla Saikiran, Founder & CEO of Scope, an invite-only networking platform with a fintech and gaming-focused venture capital fund worth $45 million, commented on the strategic shift. “Scaling down products like Zip highlights a broader fintech trend—moving away from high-risk, small-ticket loans to focus on quality over quantity. Despite losses, MobiKwik’s shares surged post-IPO, indicating investor confidence in fintech’s long-term potential. The market seems to value growth potential and revenue scale over short-term profitability, especially for firms demonstrating strong operational metrics,” Saikiran said.

A Strategic Pivot for Sustainable Growth

Founded in 2009 by Bipin Preet Singh and Upasana Taku, MobiKwik currently serves 172 million registered users and 4.5 million merchants, offering a wide range of payment products such as MobiKwik Wallet, UPI, Pocket UPI, and Zaakpay (payment gateway). The fintech startup has also ventured into distributing credit, savings, investment, and insurance products on its platform.

MobiKwik’s renewed focus on scaling its payments business, diversifying financial products, and launching the RuPay credit card underscores its strategic pivot to secure steady income streams and navigate market challenges. With a strong emphasis on operational efficiency and strategic investments, the company is positioning itself for long-term growth in the competitive fintech landscape.

The National Payments Corporation of India (NPCI) has announced a critical update for Unified Payments Interface (UPI) transactions. Effective February 1, 2025, UPI apps that generate transaction IDs containing special characters will face disruptions as these transactions will be declined by the central system. The move is aimed at improving system efficiency, standardizing transaction processes, and enhancing security across the UPI ecosystem.

Why the Change?

In an official circular dated January 9, 2025, NPCI emphasized the need for uniformity in UPI transaction ID formats. According to the circular:

“Considering the criticality of compliance to the specifications, it has been decided not to allow any special characters in UPI transaction IDs. Any transaction with an ID containing special characters shall be declined by the central system. This shall be effective from February 1, 2025.”

The decision follows a previous directive issued on March 28, 2024, where NPCI instructed payment service providers (PSPs) to adopt a standardized 35-digit alphanumeric format for transaction IDs. Despite significant progress in compliance, some payment ecosystem players continue to use special characters in transaction IDs, prompting NPCI to enforce stricter measures.

Impact on Consumers and Businesses

For UPI users, this directive means that transactions made through non-compliant apps will no longer be processed. Apps that fail to conform to the updated requirements will be unable to facilitate payments from February 1, 2025.

Mohan K, Founder of TechFini, explained the rationale behind the move:

“UPI transactions containing special characters in their transaction IDs will be declined by the central system. Only transaction IDs that follow an alphanumeric format will be processed successfully. This move aims to enhance system efficiency, prevent potential security vulnerabilities, and ensure uniformity across UPI transactions.”

Alok Singh, Executive Vice President at Ongo (AGS Transact), highlighted the compliance status:

“Most major payment ecosystem players have already complied with the NPCI directive regarding 35-digit alphanumeric transaction IDs. However, some PSPs remain non-compliant. Consumers using these non-compliant apps will face transaction failures post-February 1, 2025.”

Rahul Jain, CFO at NTT DATA Payment Services India, emphasized NPCI’s ample notice period:

“The NPCI has provided sufficient time for industry players to transition and adhere to UPI technical criteria. Transactions with special characters will be rejected after the deadline. Given the current state of preparedness, most players have already ensured compliance to avoid disruptions.”

Additional NPCI Guidelines

1. Transaction ID Length:
   • All UPI transaction IDs must be exactly 35 characters long and consist only of alphanumeric characters.
   • NPCI mandates validation at the central system level to reject any transaction IDs not meeting these specifications.
2. Duplicate Transaction IDs:
   • Duplicate transaction IDs have caused settlement issues and customer dissatisfaction. NPCI has reinforced the validation process to prevent such occurrences.
   • In cases where duplicate IDs are processed by the central system, the liability will fall on the defaulting PSP.
3. Transaction Monitoring:
   • If successful transactions are not present in the raw data files provided by PSPs, beneficiary banks must hold the funds in the beneficiary account.
   • Such cases should be reported to NPCI for resolution.

Benefits of Standardization

Standardizing UPI transaction IDs is expected to resolve current inefficiencies in tracing unique transactions. Alok Singh from Ongo explained:

“With so many UPI apps generating transaction IDs using their own systems, it becomes challenging to trace transactions. Customers often face difficulties when quoting transaction IDs during complaints. A standardized 35-digit transaction ID can help identify PSPs, remitters, dates of transactions, and other key details.”

Mohan K from TechFini added:

“By eliminating special characters, UPI can streamline processing, reduce errors, and improve interoperability among banks and payment service providers. Merchants, payment gateways, and financial institutions must ensure that all transaction IDs generated or processed within their systems conform to the alphanumeric requirement to prevent payment failures.”

Consumer Action Required

UPI users are advised to ensure that the payment apps they use are compliant with the NPCI directive. If an app continues to generate transaction IDs with special characters after February 1, 2025, transactions will be declined by the central system, leading to potential payment disruptions.

This move by NPCI underscores its commitment to standardizing payment processes and enhancing the reliability of digital transactions across India.

One97 Communications Limited (OCL), the parent company behind the Paytm brand, has announced the launch of its new UPI International feature, enabling Paytm users to make Unified Payments Interface (UPI) payments at select international locations. This new service makes it easier for Indian travelers to make secure, cashless payments at destinations where UPI is accepted. The feature is available in a range of popular international locations, including the UAE, Singapore, France, Mauritius, Bhutan, and Nepal, allowing users to shop, dine, and explore without the need for cash or foreign credit cards.

“We’re excited to introduce UPI International to make it even more convenient for Indian travelers to enjoy seamless, cashless payments while abroad. With this feature, Paytm users can make payments in countries like the UAE, Singapore, France, Mauritius, Bhutan, and Nepal, where UPI is now accepted,” said a Paytm spokesperson. This expansion reflects Paytm’s commitment to improving the digital payments ecosystem, ensuring that users can enjoy the same ease of use internationally as they do at home.

Seamless Setup and Use

Setting up UPI International on the Paytm app is quick and easy. Users simply need to activate the service once, linking it to their bank account. After activation, the app automatically prompts users to use UPI when scanning a UPI-enabled QR code abroad. The process is designed to be intuitive, allowing users to pay effortlessly while traveling.

Travelers also have the option to choose a usage period for UPI International, ranging from 1 to 90 days, depending on the length of their trip. This flexibility ensures that users can tailor the service to fit their travel schedule. Furthermore, users can deactivate the service at any time, offering enhanced control over their transactions. This feature is particularly useful for preventing accidental payments to foreign merchants once users have returned to India, ensuring that they only make payments when they intend to.

Transparency and Control

Paytm has also incorporated full transparency into the payment process. During transactions, users can view the applicable foreign exchange rates and any conversion fees charged by their bank, ensuring that there are no hidden costs or surprises when completing the payment. This added layer of clarity helps users make informed decisions while managing their finances abroad.

In addition, UPI International offers travelers the ability to easily track their spending, providing them with greater control over their budget. This makes it easier for users to stay within their limits and avoid overspending while traveling.

Enhanced Payment Experience Across International Destinations

With UPI International, Paytm users can now enjoy a smoother and more convenient payment experience at iconic international destinations. Whether they’re shopping in the vibrant malls and markets of Dubai, exploring bustling street markets in Singapore, enjoying the beautiful beachside shops in Mauritius, or visiting artisanal craft stores in Bhutan and Nepal, travelers can make secure, cashless payments through the Paytm app wherever UPI is accepted. This enhances the overall travel experience, eliminating the need to carry cash or constantly convert currencies.

“As the holiday season approaches, we’re confident that this new feature will make international travel even more convenient for our users. This launch is another step towards enhancing the Paytm ecosystem and providing our customers with a seamless, digital-first payment solution, no matter where they are in the world,” the Paytm spokesperson added.

Managing Finances with Ease

In addition to the UPI International feature, Paytm recently launched the UPI statement download feature. This new tool allows users to access detailed transaction records in a clear and user-friendly format. This feature is particularly helpful for travelers, as it helps them track their spending, monitor exchange rates, and keep a record of all their international transactions. This functionality supports effective budgeting and financial management, allowing users to stay on top of their expenses during and after their trip.

Overall, the introduction of UPI International and other recent features highlights Paytm’s commitment to making digital payments more accessible and convenient for Indian users, both at home and abroad. As digital payment adoption continues to grow, Paytm is positioning itself as a leader in providing seamless, borderless payment experiences for Indian consumers across the globe.

PhonePe and Google Pay maintain dominance in UPI market. The National Payments Corporation of India (NPCI) has not yet decided whether it will implement a 30% market share cap for payment platforms offering Unified Payments Interface (UPI) services by the end of 2024. This statement was made by NPCI’s Managing Director and CEO, Dilip Asbe, on Tuesday. Asbe clarified that a decision on the matter has not been made yet, adding, “The decision is yet to be taken. I don’t think I can comment on that (imposition of 30% cap).”

Asbe also commented on the increasing number of UPI app providers entering the market. He mentioned that many leading banks, including the State Bank of India (SBI) with its Yono app, have upgraded their platforms to integrate UPI functionality. “We have started seeing more app providers coming into play. Now, all leading banks, including SBI (Yono app), have modified their apps to be UPI apps. Obviously, it is going to take time, we are aware of that,” he added.

Market Domination

As of October, PhonePe and Google Pay continue to dominate the UPI market, holding a combined share of over 85% of the total transaction volume, according to data shared by NPCI. Paytm, the third-largest payment app by transaction volume, had a market share of 7% during the same period, while apps ranking below the third position had less than 1% of the total market share. This indicates the significant market power that PhonePe and Google Pay hold in the UPI space, with the top two players continuing to vastly outpace their competitors in terms of transaction volume.

Potential 40% Market Share Cap

Reports from TechCrunch suggest that NPCI is considering increasing the market share cap for UPI operators, possibly raising the limit to 40% or higher. This would apply to the market share that any single UPI provider could hold, particularly as the top two players continue to dominate. Originally, NPCI proposed a 30% cap on the market share for third-party UPI apps in November 2020. This cap was introduced as a measure to promote competition and prevent market monopolization. The deadline for implementing the cap, which was initially set for December 2022, has since been extended to December 2024, reflecting the complexity of implementing such a regulatory measure in a rapidly growing digital payments ecosystem.

UPI Growth and Record Transaction Volume

India’s UPI system achieved a major milestone in October, setting a new record with a total of 16.58 billion transactions, valued at ₹23.50 lakh crore. This surge was largely driven by the festive season, which boosted consumer spending and contributed to a 45% year-on-year increase in UPI transactions. The growth in UPI usage reflects its increasing importance as a primary mode of payment in India, with both person-to-person (P2P) and person-to-merchant (P2M) transactions continuing to rise steadily.

While P2P transactions account for the majority of the transaction value, the growth in P2M transactions is also notable. Leading banks in the UPI ecosystem, such as the State Bank of India (SBI), HDFC Bank, and YES Bank, are the top remitters and beneficiaries in the system, playing a crucial role in driving the volume and adoption of UPI.

The continued dominance of major payment platforms like PhonePe and Google Pay, along with the potential changes to market share caps, highlights the dynamic and evolving landscape of the digital payments industry in India. The future of UPI will likely depend on how NPCI addresses the competitive balance in the market, particularly as more players join the ecosystem and consumer adoption grows further.

Santosh Iyer, Managing Director & CEO of Mercedes-Benz India, has called for a transformative “UPI moment” for the Electric Vehicle (EV) charging ecosystem. He highlighted the need for an all-in-one Battery Electric Vehicle (BEV) charging application that works seamlessly at home, in offices, around town, and on the road to accelerate EV adoption. Drawing parallels to India’s Unified Payments Interface (UPI), Iyer proposed the creation of a unified app integrating multiple charging points, enabling users to charge vehicles and pay effortlessly across the country.

“The charging infrastructure is expanding with private players entering the space. However, the biggest challenge is the reliance on multiple apps for vehicle charging. While there are aggregators, the process remains cumbersome,” Iyer said during a fireside chat at the Green Bharat e-Mobility Summit, organized by Network18 in collaboration with Ola Electric Mobility. He emphasized the importance of a policy framework to streamline the ecosystem, allowing for a single app to locate chargers, book slots, and facilitate seamless payments.

Iyer noted that such an approach would alleviate the challenges associated with EV charging and cited the example of the Mercedes Me app offered to EV customers overseas. He added, “If a car can locate the right charger, book an appointment, and make payments on its own, the entire experience becomes seamless. With India’s strong digitalization push, the country has the potential to create a global charging framework.”

The Mercedes-Benz India head also addressed broader policy challenges, including India’s two-tier tax structure—GST and state road taxes, which vary between 18% and 20%. He urged the government to adopt a standardized EV policy, offering support until EVs achieve a significant market share, such as 30% of total sales. “Without consistent taxation policies, EV penetration will remain limited,” he stated.

Iyer further underscored the automotive industry’s responsibility to decarbonize, revealing the company’s ambition to achieve an all-electric fleet in select markets by 2030. However, he acknowledged that customer adoption rates remain slow, pointing to the need for coordinated efforts from governments, industry stakeholders, and consumers.

He also highlighted Free Trade Agreements (FTAs) and reduced taxes on premium cars as avenues to boost EV exports from India. “To build world-class cars adhering to global standards, we need an open trading environment and a supportive taxation structure. This would enable scale and create opportunities for India to become an export hub,” he explained.

Finally, Iyer noted the instrumental role of Mercedes-Benz India’s R&D center in Bangalore in shaping the company’s global EV strategy. “Our software-defined cars and proprietary operating system are being developed by our team in Bangalore. The center is also contributing to AI-driven battery management systems and advanced safety technologies,” he said.

Digital payment transactions have seen remarkable growth in India over the past few years, with the adoption of platforms like UPI (Unified Payments Interface) revolutionizing the way payments are made. As digital payment solutions have become more mainstream, they have contributed significantly to enhancing financial inclusion and providing seamless transaction experiences. However, this unprecedented growth in digital payments has also given rise to a concerning increase in fraud-related activities.

Recent data shared by the Union Ministry of Finance in Parliament paints a worrying picture. The total monetary value of frauds related to UPI surged to ₹1,087 crore in the fiscal year 2023-24, which marks an alarming 89% increase compared to ₹573 crore in 2022-23. This dramatic rise in the value of UPI frauds highlights the growing vulnerability of digital payment systems to fraudulent activities.

Moreover, the number of fraud incidents linked to digital payments also saw a sharp spike. The number of payment-fraud cases nearly doubled, jumping from 725,000 in 2022-23 to 1.34 million in 2023-24. This means that every year, a greater number of people are falling victim to UPI-related scams, which are becoming more sophisticated and widespread. In just the first half of the 2024 financial year, India reported over 632,000 UPI fraud cases, underscoring the scale of the problem.

These incidents of fraud range from phishing scams to fake apps, SIM card swaps, and unauthorized transactions, all of which have been designed to exploit the vulnerabilities of users, often with dire consequences. As the volume of digital transactions continues to rise, fraudsters are also innovating, finding new ways to bypass security measures and defraud unsuspecting users.

The increasing frequency and scale of UPI frauds are a growing concern for both consumers and financial institutions. As digital payments become integral to everyday life, the rise in fraud is also beginning to erode trust in the security of these systems. If these trends continue unchecked, users may become more hesitant to embrace digital payment methods, potentially hindering the progress India has made toward a cashless economy.

To mitigate these risks, there is a pressing need for more robust security measures, better user education on digital safety practices, and improved regulatory oversight. Banks and payment service providers must work together to enhance the security of UPI transactions, introducing stronger authentication methods and monitoring for suspicious activity. Without these efforts, the rising cases of fraud could undermine the immense benefits digital payments offer, impacting both users’ confidence and the future growth of the sector.

1. Unprecedented Growth in Digital Payments: India has witnessed significant growth in digital payment transactions, particularly through platforms like UPI, driving financial inclusion and providing convenient payment options.
2. Surge in UPI Frauds: Alongside the rapid growth of digital payments, UPI frauds have surged. The value of UPI-related frauds increased by 89%, from ₹573 crore in 2022-23 to ₹1,087 crore in 2023-24.
3. Increase in Fraud Incidents: The number of UPI fraud cases nearly doubled, rising from 725,000 incidents in 2022-23 to 1.34 million in 2023-24, signaling a significant escalation in fraudulent activities.
4. Rising Fraud Cases in the Current Year: In the first half of 2024, over 632,000 UPI fraud cases were reported, showcasing the scale and ongoing nature of the problem.
5. Types of UPI Frauds: Fraudsters are employing various tactics, such as phishing scams, fake apps, SIM card swaps, and unauthorized transactions, to exploit user vulnerabilities.
6. Impact on Users’ Confidence: As fraud cases rise, users may become increasingly wary of digital payment systems, potentially reducing their trust in UPI and hindering the growth of cashless transactions.
7. Eroding Trust in Digital Payments: If UPI frauds continue to rise, it could negatively impact the broader acceptance of digital payment solutions, undermining the progress towards a cashless economy in India.
8. Need for Stronger Security Measures: To address the surge in frauds, there is an urgent need for enhanced security protocols, including stronger authentication methods, and better monitoring for suspicious activities in UPI transactions.
9. User Education on Digital Safety: Alongside improved security measures, educating users about safe practices in digital payments is essential to reduce the risk of falling victim to fraud.
10. Regulatory Oversight: Increased regulatory oversight and collaboration between banks, payment service providers, and law enforcement agencies are crucial to curb the rise in digital payment frauds and ensure a safer transaction environment for users.

On October 9, the Reserve Bank of India (RBI) announced an increase in the transaction limit for UPI 123Pay, raising it from ₹5,000 to ₹10,000. Alongside this, significant updates were introduced for UPI Lite wallets. The National Payments Corporation of India (NPCI) has issued guidelines for banks and service providers to comply with these changes.

What is UPI 123Pay?

UPI 123Pay is a digital payment solution designed for feature phones, allowing users to perform UPI transactions without needing internet access. It supports four payment methods:

• Interactive Voice Response (IVR) numbers
• Missed call-based transactions
• Apps embedded in feature phones by OEMs (Original Equipment Manufacturers)
• Proximity sound-based payments

This innovation promotes financial inclusion by enabling digital payments for users without smartphones or internet connectivity.

UPI Lite Wallet Updates

In addition to changes in UPI 123Pay, the RBI introduced updates for UPI Lite wallets:

• Wallet balance limit: Increased from ₹2,000 to ₹5,000.
• Per-transaction limit: Raised from ₹500 to ₹1,000.

Implementation Timeline for UPI 123Pay Changes

While the revised transaction limit for UPI 123Pay is effective immediately, the NPCI has set January 1, 2025, as the deadline for implementing additional updates.

Key Changes to Be Implemented by January 1, 2025

1. Increased Transaction Limit
   The transaction limit for UPI 123Pay will officially rise from ₹5,000 to ₹10,000.
2. Aadhaar OTP Onboarding
   Aadhaar-based OTP will become mandatory for onboarding users, ensuring enhanced security and streamlined authentication.
3. Transaction Tagging
   • Introduction of a new purpose code (86) for UPI 123Pay transactions.
   • All financial and non-financial transactions must include this code in the purpose tag.
   • The previous initiation mode (31) will be deprecated.
4. UPI Numeric ID Mapper Integration
   Banks and service providers must integrate with the UPI Numeric ID Mapper to enable functionality for UPI numbers, simplifying transaction processes.

Why These Changes Matter

RBI Governor Shaktikanta Das emphasized UPI’s transformative impact on India’s financial ecosystem, enhancing accessibility and inclusivity in digital payments. These updates aim to foster innovation, expand adoption of UPI-based solutions, and ensure the system meets the evolving needs of users across diverse segments.

In October 2024, the Unified Payments Interface (UPI) achieved a significant milestone, processing 16.58 billion transactions valued at ₹23.5 trillion, marking the highest volume and value since its inception in April 2016. This new record surpasses UPI’s previous peak of 15.04 billion transactions in September 2024 and ₹20.64 trillion in value recorded in July.

Growth Driven by Person-to-Merchant Transactions

The surge in UPI transactions was largely driven by person-to-merchant (P2M) payments, which saw a significant boost during the festival season in October. This marked the first time UPI crossed 16 billion transactions in volume and ₹23 trillion in value, highlighting the growing reliance on UPI for everyday purchases and services.

Compared to September 2024, October saw a 10% increase in volume and a 14% rise in transaction value. Data from the National Payments Corporation of India (NPCI) shows that 14.96 billion UPI transactions amounted to ₹20.61 trillion in August.

Daily Transaction Figures Soar

In October, daily UPI transactions reached a new high, crossing 535 million in volume and ₹75,801 crore in value, compared to 501 million transactions and ₹68,800 crore in September. Year-on-year, UPI transactions grew by 45% in volume and 37% in value.

Other Payment Systems Show Strong Growth

• IMPS (Immediate Payment Service): October saw 467 million IMPS transactions, a 9% increase from September, totaling ₹6.29 trillion—an 11% increase in value from the previous month.
• FASTag: The number of FASTag transactions grew by 8% in October, reaching 345 million transactions, worth ₹6,115 crore, compared to ₹5,620 crore in September.
• Aadhaar Enabled Payment System (AePS): October saw 126 million AePS transactions, a 26% increase from September, with the total value growing 35% to ₹32,493 crore.

Year-on-Year Growth Across Transactions

• IMPS: Volume grew by 5%, while value increased by 17% compared to October 2023.
• FASTag: Volume rose 8% and value by 10% year-on-year.
• AePS: A notable 26% increase in transaction volume and a 25% rise in value compared to October 2023.

The data underscores the growing adoption and trust in digital payment systems, with UPI leading the way in shaping India’s cashless economy.