The Reserve Bank of India (RBI) has announced that it will soon revise the unified payment interface (UPI) transaction limits for paying money to merchants (P2M). It’s notable that the transaction limits for person to person (P2P) has been left unchanged at Rs 1 lakh.“At present, the transaction amount for UPI, covering both Person to Person (P2P) and Person to Merchant payments (P2M), is capped at Rs 1 lakh except for specific use cases of P2M payments which have higher limits, some at Rs 2 lakh and others at Rs 5 lakh. To enable the ecosystem to respond efficiently to new use cases, it is proposed that NPCI, in consultation with banks and other stakeholders of the UPI ecosystem, may announce and revise such limits based on evolving user needs. P2P transactions on UPI shall continue to be capped at Rs 1 lakh, as hitherto,” said RBI Governor Sanjay Malhotra on April 9, 2025.
Vishal Maru, Global Processing Head, FSS (Financial Software and Systems), says: “RBI’s proposal to allow higher limits for P2M UPI transactions will surely be welcomed by the industry. Higher transaction limits for evolving use cases and merchants of different types will foster innovation. The current transaction limits have often been hinderances for certain merchants and businesses to fully make use of UPI while accepting digital payments.”
How increasing this UPI transaction limits for payments to merchants may open up new use cases
We have asked various experts about how new use cases for UPI could open up if the Person to Merchant (P2M) limits are increased. Here’s what they said:
UPI payments abroad may benefit from higher limits
Currencies of most countries (with some exceptions) who accept UPI payments are traded higher than Indian Rupees, hence the transaction limits which is set by the RBI as per Indian Rupees falls short when making payments abroad. Experts hope now with the enhanced limits this shortfall could be fixed.
According to Adhil Shetty, CEO of Bankbazaar.com “The RBI wants to revisit these limits (mentioned above) to accommodate new use cases. UPI payments are now accepted in select countries abroad, so this may be one of the use cases.”
School, college, hospital bills could be paid through a single UPI account without the need for splitting it
Jai Kumar, Co-Founder, TechFini, a payments processing company, says, the proposed revision of UPI transaction limits offers several consumer benefits and may eliminate the need for splitting big payments like those incurred on school, college, hospital, etc.“It enhances convenience by allowing higher limits for specific use cases, such as hospital bills or school fees, thereby reducing the need to split payments or switch to other payment methods. As more merchant categories become eligible for higher P2M limits, users will have the ability to transact larger amounts seamlessly. Additionally, with appropriate safeguards, consumers get the benefit of increased limits without compromising safety,” says Kumar.
Rahul Jain, CFO – NTT DATA Payment Services India expects that merchants functional in the BFSI, education, and government spaces will see a hike in UPI payment limits. “Ultimately, it all depends on the risk category a particular merchant is operating in. The higher the risk factor, the less likely it is for NPCI and banks to enhance their limits.”
Anup Agrawal, CEO & Co-Founder of Kiwi, says: “The RBI’s proposal to raise UPI P2M limits paves the way for higher-value use cases like paying college fees or hospital bills directly via UPI. Crucially, it also empowers small and micro businesses to accept larger payments without depending on traditional acceptance infrastructure, making UPI a preferred mode of commerce across B2C segments. With strong user trust and the right safeguards, this move strengthens UPI’s role in India’s digital economy.”
Big ticket purchases like car down payment can become smoother using UPI
Jain from NTT DATA Payment Services India, says that the proposal to enhance the P2M limit aligns with the growing applications of UPI in our daily lives. Big ticket purchases- such as down-payments for cars, payment of fees at educational institutes, government payments and urgent security deposits at healthcare facilities – can be facilitated by this move.
UPI’s average monthly ticket size may increase due to increase in transaction limits
Shetty highlights that the monthly average ticket size for UPI payments has shrunk by about 9.66% (from Rs 1510 to Rs 1364).
“On the whole, on the retail side, UPI payments are actually getting smaller. While transactions have grown 33% February-on-February to 16 billion payments moving Rs 22 trillion for the month, the average UPI payment in February 2025 was Rs 1364 compared to Rs 1510 the previous February. This reveals that reliance on UPI for small-ticket payments is increasing,” says Shetty.
NPCI to identify new merchant categories which could potentially benefit from enhanced transaction limits
According to Kumar, before this development announcement by the RBI, specific merchant categories were permitted higher transaction limits for P2M payments. For example: for insurance payments Rs 2 lakh, for IPO, income tax, etc its Rs 5 lakh.
“These enhanced limits were already in place before the latest update. The new development empowers NPCI to continue identifying and notifying new merchant categories that could benefit from enhanced transaction caps in line with user demand,” says Kumar.
Will NPCI revise the UPI transactional limits downwards?
Can a revision of limit by NPCI mean a lower limit on any transaction? According to Jain from NTT DATA Payment Services India, “It is highly unlikely that merchants will see a reduction in UPI transaction limits below the currently mandated general limit of Rs 1 lakh, since the circular explicitly speaks of limit enhancements.” Source Link
