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New Delhi, India – Significant changes to the Unified Payments Interface (UPI) system, implemented by the National Payments Corporation of India (NPCI), have come into effect from August 1, 2025. These new guidelines aim to enhance the efficiency, security, and reliability of digital transactions, addressing concerns such as system load during peak hours and preventing fraudulent activities. The changes will impact how users interact with popular UPI applications like Google Pay, PhonePe, and Paytm.
The roll-out of these revised rules follows an NPCI circular issued earlier this year, outlining the necessary adjustments for Payment Service Providers (PSPs) and UPI ecosystem members. The primary motivation behind these updates is to streamline the burgeoning volume of UPI transactions, which has seen remarkable growth, with India accounting for an astounding 49% of all global real-time payment transactions in 2023, according to an ACI Worldwide Report.
Detailed Changes and Their Impact:
Limited Balance Checks: Users will now be able to check their bank account balance through each UPI app a maximum of 50 times per day. This measure is designed to reduce the strain on UPI servers, particularly during peak hours, and deter excessive or automated inquiries. After every successful financial transaction, the updated account balance will also be displayed automatically, minimizing the need for separate balance checks.
Fixed Timings for Autopay Transactions: Recurring payments, such as EMIs, SIPs, and OTT subscriptions, processed via UPI Autopay, will now be executed only during non-peak hours. Specifically, these transactions are to be processed either before 10 AM, between 1 PM and 5 PM, or after 9:30 PM. This aims to distribute the processing load more evenly throughout the day, improving system performance. Each autopay mandate will be allowed one initial attempt and up to three retries.
Faster Transaction Status Updates: To address instances of transactions remaining in "pending" or "processing" status, UPI apps are now mandated to display the final transaction status (success or failure) within seconds. Users will be able to check the status of a pending transaction a maximum of three times, with a mandatory waiting period of 90 seconds between each attempt, to prevent server overload from repeated refreshes.
Limited Access to Linked Bank Accounts: Users can now view the list of bank accounts linked to their mobile number through a specific bank in a UPI app a maximum of 25 times per day. Explicit consent will be required each time a user attempts to view or verify a linked account, adding an extra layer of security.
Recipient Name Visibility: A crucial security enhancement is the requirement for UPI apps to display the registered name of the recipient before a transaction is confirmed. This aims to prevent errors and reduce the risk of sending money to the wrong person or falling victim to fraud.
Compliance Measures for PSPs: The NPCI has stated that non-compliance with these new guidelines by Payment Service Providers by the stipulated deadline of July 31, 2025, could lead to various actions, including restrictions on UPI API access, penalties, and even the suspension of new customer onboarding.
Background and Context:
UPI has rapidly transformed India's digital payment landscape since its inception. However, with its exponential growth, especially with billions of transactions processed monthly, instances of server strain, transaction failures, and potential vulnerabilities have emerged. The new rules are a proactive step by the NPCI to optimize the system's performance, ensuring a smoother and more secure experience for its vast user base. This move aligns with the larger objective of promoting wider adoption of digital payments while maintaining robust infrastructure and user trust.
Impacts and Consequences:
For the average UPI user, these changes are largely aimed at improving the overall experience by reducing transaction failures and enhancing security. While some users might need to adjust their habits regarding frequent balance checks, the benefits of a more reliable and efficient system are expected to outweigh these minor adjustments. Payment aggregators, such as RazorPay, Cashfree, and PayU, are also facing new charges on UPI transactions from some banks, like ICICI Bank, to cover the maintenance costs of the UPI system. However, these charges are generally not being passed on to individual customers or merchants.
The new UPI rules, effective from August 1, 2025, mark a significant step in the ongoing evolution of India's digital payment ecosystem. By focusing on system efficiency, user security, and transaction reliability, the NPCI aims to further solidify UPI's position as a cornerstone of India's digital economy. As these changes are assimilated, the digital payment landscape is poised for a more robust and secure future, benefiting millions of users across the nation. Ongoing developments and user feedback will likely shape further refinements to these guidelines in the future.