UPI New Rule Implemented: Faster Refunds to Penalty for Delays, Check What Has Changed ?

A major change in the Unified Payments Interface (UPI) system has come into effect from July 15, 2025, aimed at improving the experience of users facing failed transactions. According to the revised guidelines, if a payment fails and the amount is debited but not credited to the recipient, the user is entitled to a faster refund. If the refund is not processed within the stipulated time, banks will now have to pay a penalty of ₹100 per day until the amount is returned.

Faster and Autonomous Refunds

Under the new framework issued by the National Payments Corporation of India (NPCI), banks and UPI apps can now process refunds for failed or misdirected transactions without waiting for NPCI's approval. This move is expected to reduce delays and streamline the grievance redressal mechanism. Refunds for failed transactions must now be processed within one working day (T+1). In cases involving merchants, the turnaround time is five days (T+5). Any delay beyond this will attract daily compensation of ₹100.

Limits on API Usage to Avoid Overload

From August 1, 2025, additional technical regulations will be enforced to prevent system overloads. These include:

A maximum of 50 balance inquiries per user per day.

Limit of 25 requests per day to check linked accounts.

Autopay services can only be scheduled during specific time slots (before 10 AM, between 1–5 PM, or after 9:30 PM).

Users can check the status of a failed transaction up to three times, with a mandatory 90-second gap between attempts.

These measures are designed to minimize server congestion and reduce the frequency of transaction delays, particularly during peak usage hours.

UPI Transactions Now Faster Than Ever

The new rules also target efficiency. Transaction statuses—whether successful, failed, or pending—must now be updated within 10–15 seconds. This is expected to improve transparency and give users immediate clarity on the outcome of their payments.

Long-Term Impact on Users and Businesses

These developments mark a significant step towards building a more reliable digital payments ecosystem. Users can expect:

Quicker resolution of issues.

Reduced need for manual complaints.

Greater trust in the system due to transparent and timely responses.

For banks and payment service providers, the shift also reduces dependency on the NPCI for every refund and encourages proactive resolution mechanisms.