NPCI Sets New UPI Rules: Here's What Changes for You

In a crucial move impacting millions of digital payment users across India, the National Payments Corporation of India (NPCI) is introducing new Unified Payments Interface (UPI) API guidelines that will come into effect from August 1, 2025. These updated protocols aim to boost transaction security and system efficiency.

Key API Usage Rules and Restrictions for UPI Users

Balance Check Limit

• Users will now be limited to 50 balance checks per day per UPI app.

• If an individual uses two different UPI apps, they can perform 50 balance checks on each.

Transaction Status Checks

• APIs used by Payment Service Providers (PSPs) to verify transaction status must follow a time-delayed approach under the new rules.

• This ensures system resources aren't overburdened by real-time continuous checks.

Linked Bank Account Checks

• Users can only view which bank accounts are linked to their mobile number up to 25 times per day per app.

• This feature will be functional only after the user selects their bank and gives consent.

NPCI’s Directive to Banks and PSPs

The NPCI circular dated May 21, 2025, clearly states:

“PSP banks and/or acquiring banks shall ensure all the API requests (in terms of velocity and TPS — transactions per second limitations) sent to UPI are monitored and moderated in terms of appropriate usage (customer-initiated and PSP system-initiated)”.

Compliance Deadline and Penalties

• All banks and PSPs like PhonePe, Paytm, Google Pay must strictly monitor API usage.

• Violations may lead to penalties, restrictions on services, or a ban on onboarding new users.

• Additionally, all PSPs are required to submit a system audit undertaking by August 31, 2025.

Why These Changes Matter

According to NPCI, the new usage limits are designed to:

• Strengthen user security

• Prevent system abuse

• Improve overall UPI infrastructure stability

About National Payments Corporation of India (NPCI) 

The National Payments Corporation of India (NPCI) is the backbone of India's digital payment ecosystem, a not-for-profit organization that has revolutionized how millions of Indians transact daily. Established as a strategic initiative to build a robust, efficient, and accessible payment infrastructure, NPCI has been instrumental in driving financial inclusion and the country's push towards a less-cash economy.

Genesis and Vision

NPCI was incorporated in December 2008 as an "umbrella organization" for operating retail payments and settlement systems in India. It received its Certificate of Commencement of Business in April 2009. The organization was promoted by the Reserve Bank of India (RBI) and the Indian Banks' Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007.

The core vision behind NPCI's establishment was to:

• Consolidate and integrate various retail payment systems in India under a single, unified national standard.

• Enhance efficiency in retail payment operations through the optimal use of technology.

• Widen the reach of payment systems, especially to remote and underserved areas, thereby promoting financial inclusion.

• Provide secure and reliable payment solutions at minimal cost, furthering India's aspiration to be a fully digital society.

• Reduce dependency on foreign payment networks by developing indigenous payment solutions.

NPCI is owned by a consortium of major banks, reflecting its collaborative and industry-led approach.

Key Products and Services of NPCI

NPCI has developed and manages a comprehensive suite of innovative retail payment products that have fundamentally transformed India's financial landscape:

1. Unified Payments Interface (UPI): Launched in 2016, UPI is arguably NPCI's most revolutionary product. It's a real-time payment system that allows instant inter-bank fund transfers using a single mobile application. UPI enables seamless peer-to-peer (P2P) and person-to-merchant (P2M) transactions using a Virtual Payment Address (VPA), mobile number, Aadhaar number, or QR code. UPI has become a cornerstone of India's digital payments, regularly processing billions of transactions monthly (e.g., over 16 billion transactions in October 2024).

2. RuPay: An indigenously developed card payment network, RuPay was launched in 2012 to provide a cost-effective alternative to international card networks like Visa and Mastercard. RuPay supports the issuance of debit, credit, and prepaid cards by Indian banks, catering to diverse consumer needs. It has been particularly impactful in rural areas and is often linked to government benefit programs. RuPay cards now also integrate with the National Common Mobility Card (NCMC), enabling contactless payments for transit, toll, parking, and retail.

3. Immediate Payment Service (IMPS): Launched in 2010, IMPS provides an instant, 24x7, inter-bank electronic fund transfer service accessible through mobile banking, internet banking, ATMs, and SMS. India has become a global leader in real-time retail payments largely thanks to IMPS.

4. Bharat Bill Payment System (BBPS): A centralized platform launched in 2017, BBPS simplifies and streamlines recurring bill payments for various utility services (electricity, water, gas, telecom, etc.) across India. It provides a "one-stop" solution for consumers to pay bills securely and conveniently, with instant confirmation.

5. Aadhaar Enabled Payment System (AePS): Introduced to drive financial inclusion, AePS allows individuals to perform basic financial transactions (cash deposit, withdrawal, balance inquiry, fund transfer) at Point of Sale (PoS) terminals using their Aadhaar number and biometric authentication. This has been instrumental in increasing accessibility to banking services in underserved areas.

6. National Financial Switch (NFS): NPCI operates NFS, the largest network of shared Automated Teller Machines (ATMs) in India. NFS connects ATMs of various banks, enabling inter-bank ATM transactions and improving the accessibility and efficiency of ATM services nationwide. NPCI took over NFS operations in December 2009.

7. National Automated Clearing House (NACH): NACH is a web-based solution for facilitating interbank, high-volume, electronic transactions that are repetitive and periodic in nature. It's used for salary disbursements, pension payments, loan EMI collections, utility bill payments, and more, offering improved efficiency and security through automation.

8. National Electronic Toll Collection (NETC - FASTag): NETC, driven by NPCI, streamlines toll collection on national highways using FASTags, which employ RFID technology for automatic toll payments while vehicles are in motion, reducing congestion and improving efficiency.

9. BHIM (Bharat Interface for Money): A mobile application developed by NPCI based on UPI, BHIM facilitates simple, easy, and quick payment transactions using UPI. It provides an intuitive interface for users to send or receive money instantly and manage their UPI PINs.

Impact and Achievements

NPCI's initiatives have had a profound impact on India's payment ecosystem:

• Explosive Growth in Digital Payments: NPCI's products, especially UPI, have been the primary catalysts behind the exponential growth of digital transactions in India. The sheer volume and value of transactions processed through NPCI platforms are staggering, marking India as a global leader in real-time digital payments (e.g., India accounted for around 49% of global real-time payment transactions in 2023).

• Enhanced Financial Inclusion: By providing accessible, low-cost, and user-friendly payment solutions like UPI and AePS, NPCI has brought millions of previously unbanked and underbanked individuals into the formal financial system, particularly in rural and semi-urban areas.

• Reduced Dependency on Cash: NPCI's digital payment solutions have significantly contributed to India's journey towards a less-cash and eventually, a cashless economy, promoting transparency and efficiency.

• Innovation and Competition: NPCI has fostered a vibrant ecosystem of innovation, encouraging banks, fintech companies, and third-party application providers to build new services on its robust infrastructure.

• Cost-Effectiveness: By offering low or no transaction costs for many of its services (e.g., UPI), NPCI has made digital payments accessible and affordable for both individuals and small businesses.

• Global Reach: NPCI has expanded the reach of its payment systems internationally through NPCI International Payments Limited (NIPL), facilitating cross-border UPI payments and RuPay card acceptance in various countries.

Governance and Objectives

NPCI is structured as a "Not for Profit" company under Section 8 of the Companies Act 2013 (formerly Section 25 of the Companies Act 1956). This unique structure reflects its utility nature, prioritizing the public good and financial system stability over profit maximization.

Its governance framework emphasizes accountability, transparency, and integrity, with a Board of Directors comprising renowned professionals and industry experts. NPCI also has strong risk management and security frameworks, employing encryption methods, two-factor authentication, and fraud monitoring programs to safeguard its systems and data.

In essence, NPCI acts as a critical public utility for the Indian financial system, continuously innovating to make digital payments more secure, efficient, inclusive, and globally relevant.