The Unified Payments Interface (UPI) has become the backbone of India’s digital payments ecosystem, enabling seamless transactions across individuals, businesses, and institutions. In response to the increasing adoption and evolving financial landscape, the Reserve Bank of India (RBI) has introduced new guidelines for UPI transactions in 2025. These guidelines primarily focus on transaction limits and applicable charges, aiming to ensure security, efficiency, and financial inclusivity.
Let’s explore the key changes and their implications for consumers, businesses, and financial institutions.
1. New UPI Transaction Limits
The RBI has revised the transaction limits for UPI to enhance security and prevent misuse. Here are the key changes:
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Person-to-Person (P2P) Transfers:
The maximum limit for person-to-person UPI transfers remains ₹1 lakh per transaction, but RBI has introduced a daily cap of ₹2.5 lakh per user to reduce fraud risks. -
Merchant Payments (P2M Transactions):
For small merchants and daily business transactions, the maximum UPI payment limit has been increased to ₹3 lakh per transaction, allowing for higher-value digital payments. -
High-Value Transactions (Healthcare & Education):
Recognizing the need for larger payments in sectors like education and healthcare, the RBI has allowed a special category of UPI transactions with a limit of ₹5 lakh per transaction, applicable only to approved institutions. -
UPI AutoPay & Recurring Payments:
The RBI has raised the limit for UPI AutoPay transactions from ₹15,000 to ₹50,000 per mandate, allowing users to pay higher amounts for subscriptions, utility bills, and insurance premiums automatically.
These revised limits are designed to accommodate the growing reliance on UPI while maintaining security.
2. Introduction of UPI Transaction Charges
While UPI transactions have largely been free for consumers, RBI has introduced certain charges to sustain the infrastructure and improve financial inclusion. The new fee structure is as follows:
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P2P Transactions:
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Transactions below ₹5,000 remain free for individual users.
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A nominal fee of ₹2 per transaction will apply for transfers above ₹5,000.
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Merchant Payments (P2M):
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Small merchants (with annual turnover below ₹20 lakh) will continue to receive payments without any charges.
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For large merchants (turnover above ₹20 lakh), a 0.3% fee (capped at ₹30 per transaction) will be applicable for payments above ₹2,000.
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Credit Card-Linked UPI Payments:
With UPI now linked to RuPay credit cards, a 0.5% transaction fee has been introduced for payments above ₹10,000 when using credit cards via UPI. -
Wallet-Linked UPI Transactions:
Transactions using prepaid wallets (like Paytm Wallet or PhonePe Wallet) via UPI will attract a 1% fee on payments above ₹5,000.
These charges are designed to cover operational costs while keeping UPI affordable for most users.
3. Impact of RBI’s New Guidelines
For Consumers
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More Secure Transactions: The daily cap and revised limits will prevent large-scale fraud.
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Minimal Charges for Small Transactions: The common user will see little to no impact, as charges apply mainly to large transactions.
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Greater Flexibility in Payments: Higher limits for education and healthcare payments will benefit families dealing with high-cost services.
For Businesses & Merchants
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Higher Transaction Limits: Merchants can now accept larger payments without splitting transactions.
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Minimal Impact on Small Merchants: Businesses with lower turnovers will not face any charges, maintaining affordability.
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Cost Considerations for Large Merchants: Those with high turnover might need to account for transaction fees in pricing strategies.
For Banks & FinTech Companies
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Revenue Generation: The introduction of nominal charges will help banks and payment service providers maintain infrastructure.
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Encouraging More Digital Payments: Higher transaction limits could increase UPI adoption across sectors like healthcare and education.
The RBI’s new UPI guidelines for 2025 strike a balance between security, affordability, and financial sustainability. While small transactions remain largely free, charges on high-value transactions will ensure the long-term viability of UPI services. These updates are expected to strengthen India’s digital payments ecosystem, benefiting both consumers and businesses.
As digital payments continue to evolve, keeping track of regulatory changes is crucial for individuals and enterprises alike. Stay informed and make the most of UPI’s seamless and secure payment solutions.