UNIFIED PAYMENTS INTERFACE
It is an instant real-time payment system developed by the National Payments Corporation of India (NPCI) to facilitate inter-bank transactions using mobile devices.
DESCRIPTION:
Unified Payments Interface (UPI) is a real-time, instant digital payment system in India, enabling secure, 24/7 money transfers, bill payments, and merchant transactions via mobile apps using a unique ID.
What is UPI?
Unified Payments Interface (UPI) is an instant real-time payment system developed by the National Payments Corporation of India (NPCI) to facilitate inter-bank transactions through mobile phones. UPI allows users to instantly transfer funds between two bank accounts using only a unique UPI ID, and supports both person-to-person (P2P) and person-to-merchant (P2M) transactions. It is widely supported by nearly all Indian banks and is regulated by the Reserve Bank of India (RBI).
UPI has massively transformed India's digital payments landscape. As of 2025, it processes over 18 billion transactions monthly, representing 80% of all digital payments in the country and positioning India as a global leader in instant payments.
Who Founded UPI?
The National Payments Corporation of India (NPCI) is the principal organization behind UPI. NPCI was formed under the guidance of RBI and the Indian Banks Association to unify and enhance retail payments in India.
A significant contributor to UPI’s concept and rollout was Nandan Nilekani—former CEO of Infosys and Chairman of the Unique Identification Authority of India (UIDAI), which created Aadhaar. Nilekani chaired the committee responsible for drafting the framework for digital payments in India. His leadership was instrumental in shaping NPCI’s vision and in onboarding all major banks and the RBI to support UPI.
New UPI Rules Effective August 1, 2025
To address exponential transaction growth and ensure system stability, NPCI announced several new UPI rules effective from August 1, 2025. Here's an overview of the main changes:
Account Balance Enquiry Limit: Users can now check their account balance only 50 times per day per UPI app. This is to reduce unnecessary balance checks that strain the payment system.
Viewing Linked Bank Accounts: You can see your list of linked bank accounts up to 25 times per day, per UPI app. This also helps control backend load.
Autopay (Recurring Payments) Regulation: Standing instructions for things like bills, subscriptions, and SIPs can now only be executed during non-peak hours (before 10AM, 1-5PM, after 9:30PM). Each mandate is limited to four total attempts (one original + three retries).
Inactive UPI ID Deactivation: UPI IDs tied to a mobile number that have been inactive for more than 12 months will be disabled automatically to prevent fraud or misuse.
Enhanced Bank Account Verification: Newly added bank accounts will undergo stronger authentication and verification before being added to UPI apps.
Faster API Response Time: UPI API response time is now capped at 10 seconds (down from 30 seconds), improving transaction speed during high load periods.
UPI Payments via Credit Lines: From August 31, 2025, users can use pre-approved credit lines (from banks/NBFCs) for UPI payments and withdrawals, within set limits.
These rules are designed to:
- Improve system reliability during peak times.
- Reduce misuse and technical failures.
- Enhance security for all users
Future & Emerging Changes
NPCI is exploring biometric and facial recognition authentication to potentially replace PIN‑based authorisation in UPI transactions. This aims to enhance both security and accessibility, though implementation details and rollout timelines are still in progress .
A new UPI mechanism for mutual funds and broker payments mandated by SEBI ensures payments remain within verified channels, reinforcing investor protection.
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