Unified Payments Interface (UPI), the backbone of India’s digital economy, is undergoing a major transformation starting August 1, 2025. The Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) have announced seven key rule changes to improve security, increase transparency, and make transactions more efficient for millions of users.
As UPI processes over 14.3 billion transactions a month (as per NPCI June 2025 data), these changes are meant to address user concerns, reduce fraud, and streamline operations for both individuals and merchants.
In this article, we break down all seven new UPI rules, explain what they mean for users, and help you stay compliant while making your digital transactions smooth and secure.
New Daily Transaction Limits Imposed
For the first time, the RBI has introduced a cap on the total amount of UPI transactions per day for users:
- Person-to-Person (P2P) transactions: Now capped at ₹5 lakh per day
- Per transaction limit: Still remains ₹2 lakh
- For UPI Lite+: ₹1,000 per transaction with a daily cap of ₹10,000
This move is aimed at curbing suspicious high-frequency transactions and preventing misuse of UPI for illegal financial flows. It particularly affects high-volume users, such as freelancers, self-employed professionals, and stock traders who use UPI multiple times a day.
Revised Rules for AutoPay (e-Mandates)
AutoPay or UPI e-Mandates have now been restructured to give users greater control over their recurring payments:
- For recurring transactions above ₹15,000, an OTP-based re-authentication is now mandatory before every deduction
- Users will get a 24-hour pre-debit notification before any AutoPay is executed
- All mandates will need to be manually confirmed after 1 year, even if they are below ₹15,000
This aims to reduce the risk of unauthorized subscriptions and billing errors, especially from apps that auto-renew without user consent.
Inter-Bank UPI Transfers Slowed Down at Night
To prevent fraud, especially late-night financial crimes, UPI will now delay high-value inter-bank transfers between 11:30 PM and 6:00 AM:
- All transfers above ₹50,000 during these hours will experience a delay of up to 1 hour
- Applies only to inter-bank transfers, not intra-bank (same bank) transactions
The RBI cited an increase in night-time cyber frauds and mule account scams as the reason for this restriction.
Launch of UPI ‘Tap & Pay’ Using NFC
In a move to modernize digital payments, NPCI is introducing Tap & Pay functionality for UPI using NFC (Near Field Communication) technology:
- UPI apps like PhonePe, Paytm, and GPay will soon roll out support for NFC payments
- Users can simply tap their phone on a payment terminal to complete the transaction
- Initially enabled for payments under ₹500 without PIN
- Particularly useful in public transport, fast retail checkout, and vending machines
This innovation brings India closer to global contactless payment standards, making UPI even more versatile and user-friendly.
Geo-Tagging Becomes Mandatory for Merchants
From August 1, all UPI-enabled merchants will be required to have their business location geo-tagged. This means:
- The merchant’s exact business address will be captured using GPS when registering on UPI
- This data will be visible to customers for transparency
- Helps NPCI and banks verify genuine merchant locations and identify fake or duplicate sellers
Merchants who fail to geo-tag may be blocked from accepting UPI payments, ensuring only verified sellers are on the network.
Biometric UPI Authentication in Pilot Mode
To further strengthen transaction security, biometric-based UPI authentication is now being piloted in selected regions:
- Authentication through Aadhaar-linked fingerprint or facial recognition
- Particularly aimed at senior citizens, low-literacy users, and rural India
- Can be used instead of entering a UPI PIN
Though not mandatory for the public yet, if successful, biometric UPI logins may become a standard security feature in the future.
UPI for Credit Card Bill Payments Now Fully Operational
Until now, credit card bill payments via UPI were limited to a few banks. Starting August 2025:
- Users can pay credit card bills from 25+ major banks using UPI apps
- Compatible banks include HDFC, ICICI, SBI, Axis, Kotak Mahindra, and more
- The feature will be available in all top UPI apps
- Payment can be made via Scan & Pay or directly from the UPI app’s “Bill Payments” section
This addition will simplify bill payments, reduce late fees, and boost adoption of UPI in financial management.
Enhanced Customer Protection & Refund Norms
The RBI has also strengthened the grievance redressal mechanism for UPI transactions:
- If a transaction fails and the money is debited, banks must refund within 24 hours
- Failure to do so will result in ₹100 per day compensation to the customer
- Customers can raise complaints via UPI Help Desks or NPCI’s portal
This ensures timely resolution and boosts customer confidence in UPI systems.
10 Most Asked FAQs About UPI New Rules (2025)
1. What is the new daily UPI limit?
The total P2P transaction limit is ₹5 lakh per day, while the per transaction limit remains ₹2 lakh.
2. Will I need to re-verify my OTT or bill subscriptions?
Yes, for payments above ₹15,000, you'll need to provide OTP confirmation each time.
3. What happens if I try to make a ₹60,000 UPI payment at midnight?
If it's an inter-bank transfer, it will be delayed by up to 1 hour to prevent fraud.
4. Is Tap & Pay available on all phones?
Only NFC-enabled smartphones will support UPI Tap & Pay through select apps.
5. How do I geo-tag my shop for UPI?
Geo-tagging will be done via your UPI app during merchant registration using GPS.
6. Can I now pay my ICICI credit card bill via UPI?
Yes, UPI credit card bill payment is now available for ICICI and other major banks.
7. Will UPI biometric login replace PIN?
Not yet. It's currently in pilot mode and being tested with select users.
8. What if my transaction fails and I don’t get a refund in 24 hours?
You are eligible for ₹100/day compensation after the 24-hour window.
9. Are business accounts also bound by the ₹5 lakh daily limit?
This limit applies to individual accounts. Merchants may have separate caps based on KYC.
10. Do I need to update my UPI app manually for these changes?
No. The updates will reflect automatically, but make sure you’re using the latest app version.
Conclusion
The August 1, 2025 UPI rule changes mark a significant leap forward in India’s digital financial ecosystem. By addressing fraud risks, modernizing user experience through NFC and biometric technology, and streamlining recurring payments, the RBI and NPCI are ensuring that UPI continues to be safe, fast, and future-ready.
Whether you’re a regular user, a business owner, or a fintech provider, staying updated with these new rules is essential. Digital India is evolving, and so is the way we pay — make sure you're prepared.
Report by Toofan Express