The Unified Payments Interface (UPI) is a payment system conceptualised by the National Payments Corporation of India that lets users make payments using a mobile application. Introduced in 2016, this instant real-time payment system facilitates inter-bank transactions and has revolutionised digital payments in the country. It allows you to link several bank accounts to a single smartphone app, enabling instant and secure transactions between businesses and individuals.
According to reports, there were around 350 million active UPI users in India in June 2024. Thus, with its widespread adoption, it is important that you know about the UPI transaction limits. It is equally crucial that you are aware of VPA’s meaning and how UPI transactions take place. With this knowledge, you can makes the best of platforms like the Bajaj Pay UPI and pay bills, make payments, and even transfer funds to bank accounts with unparalleled convenience.
How do UPI transactions work
With UPI, you do not have to enter the bank details for each transaction. Instead, you can use QR codes, virtual payment addresses (VPAs), or UPI-registered phone numbers to transfer funds. Here is a quick explanation that summarises how UPI transactions work:
- Registration: First, you must download a UPI-enabled mobile app, such as the Bajaj Pay UPI. Once you install the app, you can register by linking your bank account and creating a unique VPA. VPA’s meaning here is a virtual payment address, which serves as your UPI ID.
- Initiate a transaction: When you wish to make a payment, you can select the payee’s VPA, scan a QR code, or enter the UPI ID. For example, if you wish to purchase a product from a local merchant, you can scan the QR code or enter their VPA to make the payment.
- Authentication: You must enter your UPI PIN to authorise the transaction. A UPI PIN is a 6-digit code you create during the registration process. This ensures safety and security, as only you can approve transactions.
- Processing: Once you enter the UPI PIN, a payment request is sent to the UPI server, which verifies the request and processes it. This is done by communicating with the issuer (your bank) and the acquirer (recipient’s bank).
- Confirmation and settlement: The last two steps involve confirmation, where you receive the notification of the payment status, and the settlement of the funds between the banks. The funds are usually transferred within a few hours.
Now, if you try to transfer large sums (more than Rs. 1 lakh), you will face several issues. Here, you must learn about UPI transaction limits.
What is the UPI transaction limit
The transaction limit is the maximum amount of funds you can transfer using UPI, either in a single instance or during a specific period. The UPI transaction limits vary across days and months. These safeguards are put in place to manage risks and ensure the safety and security associated with large transactions.
Daily and monthly UPI transaction limits
The daily UPI transaction limit is generally capped at Rs. 1 lakh. This applies to the total amount transferred in a day, whether through a single transaction or multiple smaller payments. Certain transactions, such as insurance premiums, capital market investments, and foreign inward remittances, may allow higher limits of up to Rs. 2 lakhs per day. Additionally, individual banks may impose their own daily limits, ranging from Rs. 25,000 to Rs. 1 lakh, depending on their policies.
Although the National Payments Corporation of India (NPCI) does not regulate monthly UPI transaction limits, banks often set their own caps on the total amount that can be transferred in a month. These monthly limits vary across financial institutions, making it important to understand your bank’s specific policies to avoid disruptions, especially for large or frequent fund transfers.
Higher limits for specific UPI transactions
Here are certain UPI transactions for which you get higher limits:
- Payments made to hospitals, educational institutions, and taxes can go up to Rs. 5 lakh in a day.
- Payments made to initial public offerings (IPOs) and RBI retail direct schemes have higher UPI limits.
Why choose Bajaj Pay UPI
Bajaj Pay UPI is popular among customers for the following reasons
- User-friendly interface: Navigating the app is easy and uncomplicated. You can effortlessly make payments or transfer funds.
- Instant transfers: You can make instant payments and money transfers and receive notifications in real-time.
- Link multiple accounts: You can seamlessly link multiple bank accounts to your UPI ID, enhancing payment convenience.
- Cashback offers and discounts: You can enjoy rewards like cashback and discounts while making UPI transactions.
- Bill payments: You can pay bills for a wide range of products and services, including utility bills and phone bills.
- Secure transactions: All transactions you make must be authorised by a unique UPI PIN, thus safeguarding your funds.
Conclusion
It is vital for individuals to know the various aspects of UPI payments, including VPA’s meaning, how the transactions are carried out, and the UPI transaction limits. Typically, you can transfer up to Rs. 1 lakh in a day.
However, recently, NPCI increased the UPI transaction limit for high-value payments in various sectors, such as tax, education, and healthcare. By learning more about the technicalities of UPI, you can master your payments. Platforms like Bajaj Pay further enhance the convenience of UPI by offering several benefits such as bill payments, personal loans and insurance, ensuring you make the most of this digital payment revolution.
