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4 Hour Delay for UPI Transactions Above Rs 2,000
In a bid to tackle the rising menace of online payment frauds, the Indian government is reportedly contemplating a significant measure that might impact users of the Unified Payments Interface (UPI). The proposed initiative involves introducing a minimum time frame for the first transaction between two individuals, with a potential four-hour delay for transactions exceeding Rs 2,000. This move is seen as a proactive step to enhance cybersecurity and curb fraudulent activities in the digital payment space.
The Government’s Anticipated Intervention
Government officials have disclosed that the plan aims to establish a minimum time requirement for transactions above a certain threshold occurring for the first time between two individuals. The envisioned four-hour window for the initial transaction, likely applicable to all transactions exceeding Rs 2,000, is poised to cover various digital payment methods, including Immediate Payment Service (IMPS), Real Time Gross Settlement (RTGS), and the Unified Payments Interface (UPI).
Complexity for Security: Balancing Act
While the proposed measure might introduce some complexity to digital payments, government officials argue that it is a necessary step to fortify cybersecurity. The emphasis is not solely on restricting the first transaction when an account is opened, as some digital payment systems already incorporate variations of this practice. The primary objective is to closely monitor and manage every first transaction between two users, irrespective of their transaction history.
Existing Limits of UPI Transactions and Proposed Timeframe
As of now, when creating a new UPI account, users can send a maximum of Rs 5,000 within the initial 24 hours. A similar restriction exists for National Electronic Funds Transfer (NEFT), allowing a transfer of up to Rs 50,000 within the first 24 hours after adding a beneficiary. The proposed time limit of four hours for first-time digital transactions over Rs 2,000 is set to be discussed during a meeting involving government and industry stakeholders, including the Reserve Bank of India, public and private sector banks, and tech companies like Google and Razorpay.
A senior government official, speaking on condition of anonymity, outlined the working of the proposed time limit of 4 hour delay for UPI transactions, stating, “Basically, how it will work is that you will have four hours after making a payment to someone for the first time to reverse or modify the payment. It will be along the lines of NEFT (National Electronic Funds Transfer) where the transaction happens within a few hours.”
Acknowledging potential impacts on small-scale transactions, an official added, “Initially, we did not want to have any amount limit thresholds, but through informal discussions with the industry, we realized it could impact small-scale buying like groceries, etc. so we are planning to give a leeway to transactions under Rs 2,000.”
Want to know UPI Transactions Limit for different banks? Read..UPI Transaction Limit 2023: An In-depth Look at SBI, ICICI, HDFC, and Other Banks
Rising Digital Payment Frauds: A Concern for Authorities
The urgency for such a measure (4 Hour Delay for UPI Transactions) stems from the alarming increase in digital payment fraud cases. According to the RBI Annual Report 2022-23, banks witnessed a significant number of frauds in the digital payment category during the fiscal year, with nearly 49% of cases in this category. The total number of fraud cases in the banking system during FY2023 stood at 13,530, involving a total amount of Rs 30,252 crore.
The proposed intervention gained momentum following a recent case involving UCO Bank, where technical issues in IMPS led to the crediting of Rs 820 crore to account holders without actual receipt of money. The case has now been referred to the Central Bureau of Investigation (CBI).
Upcoming Discussion on November 28: A Holistic Approach
The upcoming meeting on November 28 is poised to be a crucial platform for discussing digital payment frauds, financial crimes, and cybersecurity measures needed to counter these activities. Industry stakeholders, government authorities, and tech companies will converge to deliberate on strategies to safeguard the integrity of digital transactions and protect users from fraudulent activities.
The proposed 4 hour delay for UPI transactions above Rs 2,000 underscores the government’s commitment to fortifying cybersecurity in the realm of digital payments. While it introduces a layer of complexity, the measure is seen as a necessary step to address the growing challenges of online payment frauds. As technology continues to evolve, authorities strive to strike a balance between facilitating seamless digital transactions and implementing safeguards to protect users’ financial interests. The discussions on November 28 are anticipated to pave the way for a more secure and resilient digital payment ecosystem in India.
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