New UPI Rules from August 2025: What Every User Needs to Know About Daily Limits, Charges, and Compliance
Starting August 2025, the RBI has introduced new UPI rules affecting transaction limits, fees for high-volume users, dormant account reactivations, and enhanced KYC norms. Here’s everything you need to know.
NewsSutra
New Delhi, August 2, 2025 — Beginning this August, millions of UPI (Unified Payments Interface) users across India will experience significant changes in how digital transactions are conducted. The Reserve Bank of India (RBI), in consultation with the National Payments Corporation of India (NPCI), has implemented a series of updated rules aimed at streamlining the UPI ecosystem, enhancing user security, and bringing parity between high-volume users and regular users.
This move comes at a time when UPI has become the dominant mode of digital payment in India, clocking over 12 billion transactions per month. With the growing user base and increased dependency on instant payments, the regulatory authorities are focusing on tightening security, controlling misuse, and ensuring equitable access.
Here's a comprehensive look at the new UPI rules from August 1, 2025, and how they will impact you.
1. New UPI Transaction Limits Introduced
As of August 2025, the RBI has revised UPI transaction limits to better reflect usage patterns across different sectors. Here’s the updated structure:
-
Person-to-Person (P2P): The daily limit remains at ₹1 lakh. However, individual banks may now set lower sub-limits based on user behavior, account risk profile, or customer tier.
-
Merchant Payments (P2M): For categories like utility bills, online shopping, and recurring merchant transactions, the daily cap has increased from ₹2 lakhs to ₹3 lakhs per day, especially for verified business accounts.
-
UPI AutoPay: Recurring payments like subscriptions (OTT, SaaS, news) now have a per-transaction limit of ₹25,000, up from ₹15,000. This aims to reduce payment failures for genuine large-value recurring payments.
2. Dormant UPI Accounts to Be Deactivated
A major change that will affect occasional users is the deactivation of dormant UPI handles. As per the new guidelines:
-
UPI IDs that have not had any activity (no transactions) for 12 consecutive months will be automatically disabled for outgoing payments.
-
Users will receive two reminders—30 days and 7 days before deactivation. Reactivation can be done instantly via a mobile OTP and full KYC verification.
This step is aimed at reducing fraudulent misuse of inactive accounts and minimizing clutter in the payment ecosystem.
3. Charges for High-Frequency and High-Volume Users
While UPI remains free for regular users, new charges will be levied on bulk transaction users, primarily those using UPI for business or automated operations.
-
More than 500 UPI transactions per day (incoming and outgoing combined) will attract a nominal processing fee between ₹0.50 – ₹1.00 per transaction (subject to bank discretion), only applicable to merchant-linked accounts.
-
This rule is NOT applicable to personal accounts or peer-to-peer transfers.
According to the NPCI, this measure is designed to prevent misuse of free payment rails for commercial gain while ensuring small merchants and individuals continue to enjoy zero-cost transfers.
4. KYC Norms Strengthened for UPI Wallets and Apps
Another critical change from August 2025 is the tightening of KYC (Know Your Customer) compliance for UPI-enabled apps and wallets:
-
All users must complete full KYC before conducting transactions over ₹20,000 per month. Earlier, partial KYC accounts were allowed a monthly cap of ₹50,000.
-
UPI apps are required to flag accounts with incomplete or suspicious KYC and report them for verification or restriction.
-
New KYC data privacy protocols have been introduced, limiting how third-party apps can store and share user information.
This change comes in response to increasing incidents of fraud and identity theft reported via UPI apps in Tier 2 and Tier 3 cities.
5. QR Code Interoperability Made Mandatory
One of the long-awaited reforms now becoming reality is the mandatory QR code interoperability rule:
-
All merchants using UPI QR codes (whether from Paytm, PhonePe, BharatPe, etc.) must ensure that the code is readable by any UPI-enabled app.
-
Proprietary QR codes have been outlawed. Non-compliant QR codes will be disabled by October 1, 2025.
This aims to break silos in the digital payments landscape, promote vendor neutrality, and enhance customer convenience.
6. Introduction of UPI Fraud Detection System (UFDS)
From August, NPCI is also launching the Unified Fraud Detection System (UFDS), an AI-powered monitoring system across all UPI transactions.
-
Suspicious behaviors like repeated failed logins, high-value transfers to new beneficiaries, or sudden spikes in activity will be flagged in real-time.
-
Users flagged by UFDS may experience temporary transaction holds and receive alerts asking for confirmation or verification.
-
Banks and UPI apps must integrate with UFDS and respond to system alerts within 15 minutes.
This robust infrastructure is meant to drastically reduce phishing and SIM-swap-based UPI frauds, especially among vulnerable user groups.
7. No Change in UPI for Small and Medium Users
If you’re someone who uses UPI for basic needs like paying utility bills, shopping online, or transferring money to friends and family, there’s little to worry about.
UPI remains free, instant, and secure for over 95% of users. The changes are primarily targeted at strengthening the system for long-term sustainability and preventing systemic abuse.
Why These Changes Were Necessary
The explosive growth of UPI—fueled by zero MDR (merchant discount rate), ease of use, and smartphone penetration—has placed considerable pressure on banks and payment systems. Moreover, rising UPI-based scams and the emergence of non-regulated third-party apps prompted the RBI and NPCI to act decisively.
By revising transaction limits, enforcing strict KYC norms, and introducing fraud monitoring infrastructure, the new UPI rules aim to:
-
Safeguard user data
-
Ensure fair usage
-
Protect the system from overloading
-
Support India's digital economy with resilience and scalability
What Users Should Do Now
If you’re a UPI user, here’s a quick checklist to prepare for the changes:
-
Check if your UPI handle is active – Log in and make a small transfer if unused for long.
-
Complete your full KYC – Especially if you are nearing the ₹20,000/month mark.
-
Ensure QR codes you use (if merchant) are NPCI-compliant and interoperable.
-
Monitor for alerts or notifications from your UPI app about new charges or verification prompts.
Final Thoughts
The August 2025 update to UPI rules marks a pivotal moment in India’s digital payment journey. As the government moves toward a more secure, scalable, and transparent system, users are being encouraged to stay informed and compliant.
The essence of UPI—democratizing payments and removing friction—remains intact. But the infrastructure behind it is evolving to support a new generation of digital finance.
By understanding and adapting to these changes early, users and businesses alike can continue to benefit from one of the world’s most successful real-time payment systems.
