If your UPI account remains inactive for 1 year, it may be deactivated from 1st August 2025. Stay active by making occasional payments or transfers.
Unified Payments Interface (UPI) has become a lifeline for digital transactions in India. With billions of transactions happening every month, it's critical that the National Payments Corporation of India (NPCI) continues to update and streamline its policies to maintain efficiency and security. Starting 1st August 2025, new rules related to UPI usage, charges, account inactivity, and compliance come into effect. These rules affect both regular users and businesses, and understanding them is essential for avoiding disruption in your payment routines.
According to the NPCI guidelines, any UPI ID or account that remains inactive for over 1 year will be considered dormant. Banks and Payment Service Providers (PSPs) must deactivate such accounts to reduce fraud risks and free up inactive UPI handles.
Action Tip: If you haven’t used your UPI account for a while, make a small transaction to keep it active.
From August 1, 2025, transactions above Rs. 2,000 done via Prepaid Payment Instruments (PPI) such as wallets or gift cards may attract a nominal interchange fee ranging from 0.5% to 1.1% depending on the merchant category. This is not applicable to bank account-to-bank account UPI transfers, which remain free.
Note: Users will be notified of any charges before completing a transaction.
One of the most user-friendly updates is the new mandate for refund timelines. If a UPI transaction fails due to technical issues, the refund must be processed within T+1 days (1 working day after the transaction).
This ensures better accountability and reduces frustration for users during peak hours.
UPI Lite will become more widely adopted. It allows users to make small-value transactions (below Rs. 500) without an internet connection. The maximum wallet balance for UPI Lite is set at Rs. 2,000, and it does not require bank OTPs.
Benefit: Ideal for small vendors, rural areas, or places with weak connectivity.
In a bid to tighten security, two-factor authentication (2FA) will now be mandatory for UPI registration and adding new devices. Biometric and SMS-based OTP verification will be standard for all PSPs.
New users registering on UPI platforms will have a restricted transaction cap of Rs. 5,000 per day for the first 7 days, to monitor fraud and suspicious activity. After the initial period, full access will be granted.
One of the progressive updates is the integration of UPI for NRIs (Non-Resident Indians). NPCI now allows onboarding of international mobile numbers linked to NRE/NRO accounts. This will boost cross-border remittances and expand UPI's global presence.
All registered merchants are required to display their UPI QR codes at payment counters visibly. Failure to comply may result in temporary deactivation of UPI merchant services.
NPCI has launched pilot programs to integrate UPI-based withdrawals at ATMs. Using UPI QR codes, users can withdraw cash without a debit card, making ATM usage more secure and digital-friendly.
Users will have access to a centralized dashboard showing UPI-linked apps, devices, and recent transactions. Additionally, a complaint feature will be available with tracking IDs for better resolution.
As UPI continues to evolve, these new rules will help secure transactions, empower users, and foster responsible usage. Whether you're a merchant, daily user, or an NRI, it's important to stay informed and take proactive steps. Regularly update your app, monitor notifications from your bank or PSP, and use UPI safely.
For more such updates on digital payments, visit our Digital Payments section.
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