Last Updated on November 30, 2023 by SPN Editor
The Indian government is anticipated to employ a four-hour delay window for every Unified Payment Interface (UPI) payment above Rs 2000. This means that if a user is transferring an amount exceeding two thousand rupees to another user for the first time, the transaction will not be instantaneous as it is now. Instead, the recipient will receive the amount after a delay of 4 hours.
While this four-hour time limit for UPI payment may seem like an obstacle to the smooth flow of digital payments, it has been deemed necessary by the government, according to media reports, to address cybersecurity concerns. Once implemented, this delay in online payment will be applicable specifically to transactions made through UPIs, Real Time Gross Settlement (RTGS), and Immediate Payment Service (IMPS).
The Unified Payments Interface (UPI), an innovative digital payment system, has revolutionized the financial sector in India since its inception in 2016. This revolutionary platform has made transactions quick and effortless, ushering in a new phase in the nation’s financial industry.
However, recent changes suggest a significant alteration in the UPI payment. It has been suggested that transactions over Rs 2,000 may be delayed by up to 4 hours. While this change may seem inconvenient, it is intended to improve the security of digital transactions and safeguard users from potential fraud. The delay allows users or banks to detect and stop suspicious transactions, thereby adding an extra layer of security to the UPI platform.
The Need for Change in UPI Payment
The Reserve Bank of India’s annual report for the fiscal year 2022-23 highlighted some worrying statistics. It disclosed that there were a total of 13,530 instances of UPI payment fraud, involving a massive sum of Rs 30,252 crore. More alarmingly, nearly half of these cases were linked to the digital payment category.
These numbers have sparked serious concerns about the security of digital transactions. The growing incidence of fraud in this sector has highlighted the immediate need for improved security measures. Consequently, officials are now contemplating various strategies to strengthen the security of digital transactions and protect users from potential fraud. This has led to the suggestion of introducing a delay in UPI transactions as one of the potential solutions to this urgent problem.
The Proposed Solution
The proposed solution to reduce the rising number of frauds in UPI transactions is to implement a delay of up to 4 hours for transactions above Rs 2,000. This measure is expected to introduce some resistance to UPI payments, but officials believe it is a necessary step to address cybersecurity concerns.
How it Operates
The delay applies to the first transaction between two users. For example, if you’re transferring money to a friend for the first time via UPI and the amount is over Rs 2,000, the transaction will not be processed immediately. Instead, there will be a delay of up to 4 hours. During this delay, you will have the chance to reverse or alter the payment. This provides a safety net for users to cancel a transaction if they realize it was made in error or if it was fraudulent.
This measure is not just for the first UPI payment upon account creation, which already has some restrictions in place across most digital payment means. It is designed to regulate every first transaction between two users, regardless of their independent past transaction history. For instance, currently, when a user creates a new UPI account, they can send a maximum of Rs 5,000 in the first 24 hours. Similarly, in the case of National Electronic Funds Transfer (NEFT), after adding a beneficiary, up to Rs 50,000 (in full or parts) can be transferred in the first 24 hours.
But with the new plan, a time limit of four hours will apply every time a user makes the first UPI payment over Rs 2,000 to another user they have never transacted with before. This proposed solution is part of a wider discussion on digital payment frauds, financial crimes, and the necessary cybersecurity measures needed to combat these activities. The ultimate aim is to provide a secure, efficient, and user-friendly platform for digital transactions.
Impact on UPI Users
The expected delay in UPI payment is set to have a significant impact on a large number of users. As of June 2023, UPI recorded an astonishing 9.33 billion transactions. The total value of all UPI payments surpassed INR 14.75 trillion. Given the extensive user base, the effects of this change are expected to be widespread.