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The NPCI has directed UPI apps to obtain "explicit user consent" with a "clear-out option" when seeding or porting a user's UPI number
UPI apps are now required to keep users' default settings as “checked out” when porting their numbers, in comparison to the erstwhile “opt-out” mechanism
The NPCI has taken cognisance of the fact that many terms and conditions slip past users. This has also made way for privacy-related concerns in the past
From how users give consent to UPI apps to an increase in the UPI LITE limit, your UPI payment experience is set to get updated starting April 1.
The National Payments Corporation of India (NPCI) has recently issued a number of circulars with regard to the UPI. Earlier this month, on March 3, the NPCI directed UPI apps (PhonePe, Google Pay, Paytm, et al) to obtain “explicit user consent” with a “clear-out option” when seeding or porting a user’s UPI number.
Under this, UPI apps are now required to keep users’ default settings as “checked out” when porting their numbers. The user should now be allowed to “opt-in” if they want their numbers ported or seeded.
“A UPI app shall ensure clear, non-intrusive communication without misleading/ forceful messaging. Consent shall not be taken before or during a transaction in any condition,” the digital payments authority said in its circular earlier this month. The UPI apps need to ensure the adoption of this framework starting April 1, 2025.
This new framework is important to ensure transparency in the burgeoning digital payments ecosystem. Currently, UPI apps fetch users’ consent to seed their respective UPI IDs either at the time of signups or by putting a clause in their terms and conditions, which most of us unknowingly agree to while downloading these applications.
Why Is An “Opt-In” Option Important?
The NPCI has taken cognisance of the fact that many terms and conditions slip past users. This has also made way for privacy-related concerns in the past.
One example is of fintech giant Paytm, which drew backlash at the time of migrating its UPI users from Paytm Payments Bank-linked UPI IDs (@paytm) to IDs from its new bank partners.
In July last year, several Paytm users — both active and inactive — complained that their bank accounts were linked to new UPI IDs on Paytm, which jittered many users, raising privacy concerns among them.
A primary concern raised by many was around Paytm forcefully linking accounts to new UPI IDs even when users did not request any such change.
What Comprises NPCI’s Other Mandates?
Besides the consent mechanism, the NPCI has mandated UPI apps to remove inactive users using its “mobile number revocation list” every week. These apps have also been mandated to increase transaction limits to UPI LITE from INR 2,000 to INR 5,000.
In addition to this, the payments body has made its RuPay debit cards more attractive. The NPCI plans to equip select debit cards with features like access to domestic airport lounges, personal accident insurance cover of up to INR 10 Lakh, and complimentary gym memberships every quarter.
Meanwhile, the NPCI is planning to remove the ‘collect’ request feature for merchant payments in a phased manner to curb the rise in UPI-related fraud cases in the country.
Notably, these developments have come at a time when the government has announced an outlay of INR 1,500 Cr to incentivise third-party applications for low-value BHIM-UPI transactions for the ongoing financial year (FY25).
The government will offer an incentive of 0.15% per transaction for amounts up to INR 2,000 in the small merchants category. Unfortunately, the INR 1,500 Cr outlay is significantly lower than the INR 3,500 Cr in FY24.
