UPI 123Pay is a pioneering digital payment service that allows users to make transactions on feature phones without the need for internet connectivity. This service is particularly important for users in rural and semi-urban areas of India, where internet access is limited. To further enhance accessibility to digital payments, the Reserve Bank of India (RBI) has announced an increase in the transaction limit for UPI 123Pay from ₹5,000 to ₹10,000. This move is expected to greatly benefit millions of feature phone users across India.
The new transaction limit of ₹10,000 is already in effect, with full compliance required by January 1, 2025, as directed by the National Payments Corporation of India (NPCI). The increased limit aims to address the financial needs of people in rural and underserved areas, where feature phones are more commonly used, and internet penetration remains low. This change is crucial as it empowers individuals in such regions to make larger digital payments, thus reducing their dependence on cash.
Despite smartphones gaining popularity, feature phones still account for around 75% of the mobile phone market in India, especially in rural areas. UPI 123Pay addresses this gap by enabling digital payments without requiring internet access, making it a vital service for people in rural and semi-urban areas. This service uses various offline methods, such as Interactive Voice Response (IVR), missed calls, OEM (Original Equipment Manufacturer) apps, and sound technology to process payments, even in areas with unreliable internet access.
With the enhanced ₹10,000 transaction limit, UPI 123Pay will enable farmers, small traders, and micro-enterprises to make larger digital payments. This shift from cash to digital payments is expected to reduce cash handling risks and improve the efficiency of local markets, particularly in agriculture and retail sectors where cash transactions still dominate. The ability to carry out larger payments will also promote greater financial inclusion by enabling seamless transactions and improving market access.
The introduction of the ₹10,000 transaction limit is expected to have a significant impact on local markets, especially in agriculture. As cash continues to dominate these sectors, the new transaction limit will provide a secure and efficient alternative for making payments. It will allow local traders and farmers to carry out larger transactions digitally, fostering economic growth and reducing the risks associated with cash payments.
The increase in transaction limits will not only benefit consumers but also have broader implications for financial institutions. According to Rajesh Katoch, CEO of EZ Capital, UPI 123Pay will improve the efficiency of repayment systems for lending institutions by enabling seamless digital transactions. By facilitating larger payments, the service is expected to drive customer engagement and narrow the digital divide in rural areas with low internet penetration.
Conclusion: Empowering Rural India with Digital Payments
The rise in UPI 123Pay’s transaction limit represents a significant step toward promoting financial inclusion and reducing the digital divide in India. By facilitating larger, secure transactions on feature phones, UPI 123Pay is set to revolutionize the way people in rural India manage their finances, helping to boost local economies, promote digital literacy, and ultimately create a more inclusive financial ecosystem.