The Unified Payments Interface (UPI) has become the backbone of digital transactions in India, with millions relying on it for seamless money transfers, bill payments, and merchant purchases. As its usage continues to grow, the National Payments Corporation of India (NPCI) has introduced a new set of rules and regulatory updates that will come into effect from August 1, 2025.
These changes aim to enhance user security, reduce fraud, and streamline the system for banks, apps, and customers alike. If you’re a regular UPI user, here’s what you need to know about the upcoming changes and how they could affect your daily transactions.
Transaction Limits Revised for Security and Efficiency
One of the major updates coming into force is a revision in transaction limits for different types of users. The new framework will classify users based on their risk profile, transaction history, and account type.
For regular users, the per-day transaction limit will remain at ₹1 lakh, but for high-value transfers or new accounts, the threshold may be capped lower temporarily for additional verification. This step has been taken to curb rising incidents of fraud, especially involving newly created or dormant bank accounts.
Mandatory Re-Authentication for New Devices
To prevent misuse of accounts when UPI apps are accessed from unfamiliar devices, NPCI has made mandatory re-authentication a key rule. If a user logs into their UPI app from a new device or SIM, they will need to undergo a fresh authentication process, including mobile number verification and possibly biometric validation. This will ensure that unauthorized access is significantly reduced and adds another layer of protection to digital wallets and banking apps.
Time-Based Restrictions for First-Time Transactions
Another critical rule effective from August 1 introduces a time-based delay on first-time transactions. Once a UPI ID is added for the first time or a new beneficiary is registered, a cooling-off period of 4 hours to 24 hours may be imposed before the first transfer can be completed. This rule will help prevent quick unauthorized fund transfers in the event of mobile theft or SIM cloning.
Merchant Payments Under Scrutiny
UPI merchant transactions are also being regulated more tightly. Certain merchant categories, especially in gaming and betting apps, will see stricter compliance norms. UPI will now enforce clear identification of merchant types, and users will be notified when they’re paying to a high-risk or flagged merchant. This measure seeks to protect users from scams and fake business accounts.
Penalty on Dormant or Inactive UPI IDs
In order to manage system load and improve transaction success rates, NPCI will also deactivate UPI IDs that remain inactive for over 12 months. Users will be notified prior to such actions, but once deactivated, the UPI ID must be freshly registered. This will keep the system clean and free from unused or potentially compromised IDs.
UPI Rule Changes: Summary Table
| Change Effective August 1 | What It Means for Users |
|---|---|
| Revised Transaction Limits | Dynamic daily caps based on user profile and history |
| Re-Authentication Requirement | Mandatory verification for logins on new devices |
| Delay for First-Time Transfers | 4–24 hour delay for new UPI ID or beneficiary registration |
| Merchant Risk Flagging | Warning prompts for payments to high-risk merchant categories |
| Inactive ID Deactivation | UPI IDs unused for 12+ months to be removed |
What Users Should Do
As these new rules roll out, it’s essential for UPI users to keep their apps updated, ensure correct mobile number linkage, and regularly monitor their transaction history. Being alert and informed can prevent financial loss and ensure smooth access to services. Users should also avoid sharing OTPs or PINs under any circumstances and verify recipient names before confirming transactions.
Conclusion
The new UPI rules effective August 1 reflect India’s ongoing efforts to strengthen digital payment systems while balancing ease of use with security. As the digital economy matures, such proactive updates are necessary to stay ahead of evolving cyber threats.
While some of these measures may initially feel restrictive, they are designed with user protection in mind and will ultimately make UPI more trustworthy for everyone from students paying tuition to seniors managing utility bills.