UPI is one of the most popular payment methods in India, with over 1.5 billion transactions processed in 2022. It is popular for its convenience, speed, and security. UPI transactions can be made using a mobile phone number, UPI ID, or QR code.

Fraud prevention: Setting transaction limits helps in curbing fraudulent activities and unauthorized transactions. By imposing limits, the potential loss due to a fraudulent transaction is limited, reducing the impact on the user.

Risk management: Transaction limits play a vital role in managing the risk associated with digital payments. They prevent large-scale financial losses in case of a security breach or unauthorized access to a user's UPI account.

Customer protection: Limits act as a safeguard for customers against potential misuse of their accounts. If an unauthorized party gains access to a user's UPI account, transaction limits can prevent them from making excessive transfers or payments.

KYC compliance: Transaction limits can help ensure compliance with Know Your Customer (KYC) regulations. Setting and enforcing limits encourages users to undergo the necessary KYC process, which enhances the overall security and integrity of the UPI ecosystem.

Operational efficiency: Implementing transaction limits helps manage the load on the payment infrastructure. It prevents excessive traffic and ensures the smooth processing of transactions, thereby maintaining the efficiency of the UPI system.

UPI has revolutionized digital payments in India, offering convenience and accessibility to millions of users. However, to maintain the integrity and security of the system, transaction limits are necessary. They provide protection against fraud, manage risks, ensure compliance, and promote operational efficiency. Striking the right balance in setting transaction limits is essential to foster a secure and user-friendly UPI ecosystem.