Govt plans to make 4-hours delay in first UPI transfer over Rs 2,000

In a bid to enhance cybersecurity safeguards, the Indian government is considering imposing a four-hour time limit on every first digital transaction over Rs 2,000. The proposed measure aims not only to introduce a delay or limitation to the initial transaction but to regulate every first payment between two users, irrespective of their transaction history.

The plan, expected to be discussed in a meeting on Tuesday with government officials, industry stakeholders, and the Reserve Bank of India, could impact a range of digital payments, including Immediate Payment Service (IMPS), Real Time Gross Settlement (RTGS), and Unified Payments Interface (UPI).

The time limit would require users to reverse or modify any first-time payment over Rs 2,000 within four hours of the transaction. While initially considered without amount limit thresholds, informal discussions with industry representatives prompted the government to consider providing leeway for transactions under Rs 2,000, acknowledging potential impacts on small-scale purchases like groceries.

The move follows concerns about the increasing number of fraud cases in digital payments, accounting for almost 49% of the total reported cases during the financial year 2022-23, according to the RBI Annual Report. Recent incidents, including the UCO Bank case where Rs 820 crore was erroneously credited via IMPS due to technical issues, have highlighted the vulnerabilities in the digital payment ecosystem.

On November 28, the Department of Financial Services under the Union Finance Ministry is set to chair a meeting to discuss digital payment frauds, financial crimes, and cybersecurity measures to address these challenges.