Proposal of 4-Hour Delay for Initial UPI Transfers Over Rs 2000 to Combat Fraud

Last updated: 29 November 2023

Government Proposes Time Limit for First-time Digital Transactions to Combat Online Payment Frauds

In a bid to curb the escalating instances of online payment frauds, the government is contemplating the introduction of a minimum time limit for the first transaction between two users, especially for amounts exceeding Rs 2,000. Government officials disclosed that the proposed measure aims to add a layer of security to digital payments and could involve a four-hour window for the initial transaction.

The plan, if finalized, would impact a broad spectrum of digital payments, including those facilitated through Immediate Payment Service (IMPS), Real Time Gross Settlement (RTGS), and the Unified Payments Interface (UPI). Despite the potential inconvenience this may cause to users, officials argue that the regulatory step is crucial to mitigating cybersecurity concerns.


The envisaged time limit of four hours would apply to every first-time digital transaction exceeding Rs 2,000 between two users, irrespective of their past transaction history. Unlike existing limitations on initial transactions, the proposed measure seeks to regulate all first transactions, providing an additional layer of security and oversight.

A senior government official, speaking on condition of anonymity, explained the rationale behind the proposal. "We are looking to add a time limit of four hours for first-time digital transactions over Rs 2,000. The discussion will be taken up during a meeting with government and industry stakeholders, including the Reserve Bank of India, various public and private sector banks, and tech companies like Google and Razorpay."

The official further clarified that users would have a four-hour window after making a payment for the first time to reverse or modify the transaction. This concept mirrors the National Electronic Funds Transfer (NEFT) model, where transactions are typically processed within a few hours.

Initially, there were considerations for imposing the time limit without any amount threshold. However, after informal discussions with industry representatives, the government acknowledged potential impacts on small-scale transactions like groceries. As a result, the plan now includes a provision to exempt transactions under Rs 2,000 from the time limit.

The backdrop for this proposed regulation is the surge in digital payment frauds, as highlighted in the RBI Annual Report 2022-23. Banks experienced a significant number of fraud cases in the digital payment category during the fiscal year, with nearly half of the cases related to card/internet transactions. The financial impact of these frauds amounted to Rs 30,252 crore.

The proposal gained traction after a recent incident involving UCO Bank, where technical issues in IMPS led to the crediting of Rs 820 crore to account holders without actual receipt of money. This case, now referred to the Central Bureau of Investigation (CBI), prompted a formal discussion on cybersecurity measures in the upcoming meeting on November 28, chaired by the Department of Financial Services under the Union Finance Ministry. The meeting will address digital payment frauds and outline necessary cybersecurity measures to counter such activities.

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