UPI 123Pay’s new ₹10,000 transaction limit: NPCI directs banks to comply by January 1

The Reserve Bank of India (RBI) has announced an increase in the transaction limit for UPI 123Pay from ₹5,000 to ₹10,000. This change is set to benefit millions of feature phone users across India who have limited access to the internet.

UPI 123Pay is a unique service that allows digital payments on feature phones without the need for internet connectivity.

The update, which is already in effect, requires full compliance by January 1, 2025, as per instructions from the National Payments Corporation of India (NPCI).

Impact on users

Feature phones still account for about 75% of the mobile phone market in India, making UPI 123Pay a vital tool for rural and semi-urban populations, where smartphone usage is limited.

“By enabling transactions of up to ₹10,000, this update aims to enhance access to digital payments in these underserved areas. In regions with unreliable internet access—despite 95% of villages having 3G/4G connectivity—UPI 123Pay offers offline functionality through methods such as Interactive Voice Response (IVR), missed calls, OEM (Original Equipment Manufacturer) apps, and even sound technology to process payments. This increase in the transaction limit means that farmers, small traders, and micro-enterprises can now make larger transactions digitally, reducing their reliance on cash,” said Mohan K, Founder of TechFini.

The ability to carry out larger payments through UPI 123Pay will help boost local markets, particularly in agriculture and retail sectors, where cash still dominates.

Rajesh Katoch, CEO of EZ Capital, highlighted the broader implications of this policy for financial institutions. “UPI 123Pay will benefit rural areas with low internet penetration, ensuring seamless payments and narrowing the digital divide,” he said.

This is expected to drive greater customer engagement and improve efficiency in repayment systems for lending institutions.