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RBI plan to delay transactions over 10000 rupees to new payees sparks concern, bankers and fintechs warn it may hurt UPI speed and user experience.
UPI has seen phenomenal growth in the past few years thanks to easy interface and quick transfer of money
The Reserve Bank of India’s proposal to introduce a one-hour delay for processing transactions above Rs 10,000 to new payees has triggered concern across the financial ecosystem, with bankers and fintech players warning of potential disruption to digital payments, as reported by Moneycontrol.
According to industry stakeholders cited by Moneycontrol, the move could undermine the speed and convenience that have driven the rapid adoption of digital payments in India, particularly in real-time systems.
‘Cure Worse Than the Disease’, Say Bankers
Several industry executives remain sceptical about the proposal’s effectiveness in tackling fraud. A senior banker heading digital payments operations told Moneycontrol that the measure risks doing more harm than good.
The banker said the proposal resembles a situation where “the cure is worse than the disease”, adding that instead of introducing friction, authorities should focus on identifying and penalising fraudsters. The concern is that such a delay could dilute one of the biggest strengths of India’s payments ecosystem—real-time transactions.
Exceptions May Limit Impact, But Concerns Persist
The central bank’s discussion paper does provide certain exemptions, noted Moneycontrol. Transactions involving registered merchants will not face delays, and payments to previously added payees will continue without restrictions. Users will also have the option to whitelist trusted beneficiaries, allowing them to bypass the time lag.
Despite these relaxations, industry participants believe the broader impact on user experience cannot be ignored.
UPI Ecosystem Likely to Bear the Brunt
While the proposal applies to digital payments at large, it is expected to impact the Unified Payments Interface more significantly than other modes, according to stakeholders quoted by Moneycontrol.
Traditional systems such as IMPS and NEFT already involve additional steps like entering bank account numbers and IFSC codes, which naturally introduce a level of friction. In contrast, UPI’s simplicity and speed have been key to its widespread adoption.
Ease of Use at Risk
Raj P Narayanam, founder and executive chairman of Zaggle, told Moneycontrol that UPI’s success has been driven by its ability to enable seamless, high-value first-time transactions.
He noted that while friction exists in other payment modes, UPI eliminated these barriers, making it the preferred choice for users.
Fears of Shift Back to Cash
With a significant share of transactions being person-to-person, the proposed delay could have wider implications. Data cited by Moneycontrol shows that a large portion of UPI transactions and value comes from peer-to-peer transfers.
According to MC report, a senior executive at a UPI app warned that users have become accustomed to instant payments, and introducing delays could push them back towards cash usage. The executive added that while fraud prevention is important, adding friction may not be the most effective solution.
April 14, 2026, 3:25 PM IST
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