What`s New in UPI

Shift to Cashless Economy

The Unified Payments Interface (UPI) has played a transformative role in advancing India’s move toward a cashless economy by effectively addressing three major challenges to digital payment adoption – interoperability, instant processing and user convenience.

Its success lies in enabling users to connect several bank accounts within one mobile app and transfer money instantly at any time, simply through a Virtual Payment Address (VPA) or a mobile number. This innovation removes the need for detailed bank information or physical card transactions. UPI’s interoperable framework, which allows any customer or merchant on one app to transact seamlessly with users on another, generated a strong network effect. By converting small, routine cash transactions to digital ones, this inclusivity significantly lowered entry barriers for millions of first-time digital users. As a result, the formal economy has been strengthened and cash dependence has decreased due to the increase in digital activity.

In October 2025, UPI transactions reached record highs. As per data from the National Payments Corporation of India (NPCI), the number of transactions has increased to 20.7 billion, from to 19.63 billion in September. The total transaction value has also risen to ₹27.28 trillion, up from ₹24.90 trillion the previous month. On average, India recorded 668 million UPI transactions per day in October which is a clear sign of the platform’s sustained usage and expanding role in India’s digital payments landscape.

Background

The National Payments Corporation of India (NPCI), under the supervision of the Reserve Bank of India (RBI), has recently issued a series of circulars aimed at enhancing the Unified Payments Interface (UPI) ecosystem. These updates are designed to enhance user convenience, transaction security, and financial inclusion, while expanding the UPI’s reach to a wider range of use cases.

With these developments, UPI is evolving into a more advanced and inclusive payments platform. The new framework introduces features such as biometric authentication, support for multi-signatory accounts, AI-driven assistance, and the option for cash withdrawals through Micro ATMs.

This article provides an overview of the major directives announced by NPCI, examining their potential impact on banks, payment service providers (PSPs), UPI applications, and end users, and highlighting how they may shape the future of India’s digital payment ecosystem.

Key New Functionalities Introduced

The latest directives unveil several game-changing functionalities:

1. Biometric Authentication: Allowing transactions up to ₹5,000 to be approved using on-device biometrics (fingerprint/face) and using UIDAI Face Authentication for UPI PIN setup/reset.
2. Multi-Signatory Accounts: Enabling joint or business bank accounts that require multiple approvals to utilize UPI for payments through structured approval flows.
3. UPI AutoPay Portability: Allows users to access and easily transfer their existing AutoPay mandates between various UPI applications.
4. Cash Withdrawal via Micro ATMs: Enables users to withdraw cash at Business Correspondent (BC) outlets by scanning a secure, dynamically generated QR code.
5. UPI Reserve Pay: A feature to block a set amount (up to ₹10,000 for 90 days) in an account for multiple future payments, reducing the need to re-enter a PIN for each quick transaction.
6. UPI Circle (Delegated Payments): Extending delegation of payment rights to IoT devices and software profiles.
7. UPI HELP Assistant: Launching an AI-powered assistant to streamline query and complaint resolution for the vast UPI user base.

Intent of Authority to Introduce Enhancements

The primary intent of the NPCI and RBI behind these enhancements is a multi-pronged approach focused on strengthening the ecosystem:

• Security and Trust: By integrating robust features like biometric authentication, mandatory 2FA for Micro ATM withdrawals, and requiring annual rotation of cryptographic keys, the authorities aim to significantly enhance transaction security and user trust.
• Financial Inclusion: Expanding UPI to Micro ATMs directly addresses the challenge of cash access in remote or underserved areas, bringing the convenience of UPI to cash withdrawals.
• Wider Applicability: Introducing support for multi-signatory accounts and new sources for Reserve Pay (RuPay Credit Card, Credit Lines) extends UPI’s utility to the business sector and new credit-based transactions.
• User Convenience: Features like UPI AutoPay portability, UPI Reserve Pay, and UPI HELP Assistant improves the user experience by reducing friction in recurring payments, facilitating quick transactions, and providing immediate customer support.

Understanding the Concepts

1. Enhancement in UPI Autopay: UPI AutoPay, also known as a UPI Mandate, is a functionality developed by the National Payments Corporation of India (NPCI) that enables users to automate recurring payments through the UPI system. With this feature, a user can provide a one-time approval using their UPI PIN, authorizing a merchant or service provider to deduct a fixed amount from their bank account at regular intervals such as monthly, weekly, or quarterly. The feature simplifies routine payments by removing the need for repeated manual transactions. It is widely used for convenient payment of subscription services (like OTT platforms or newspapers), utility bills (such as electricity or mobile), loan installments (EMIs), and systematic investment plans (SIPs) in mutual funds.

   Mandate Interoperability

   • Users can now see all their active UPI AutoPay mandates in any UPI app of their choice.
   • Complete visibility and better financial management of all recurring expenses in one place, regardless of the app used for setup.

   User Control

   • Users can port a mandate from one UPI app to another.
   • Allows users to switch their primary UPI app without having to re-create all their recurring payment instructions with every merchant.

   Merchant Flexibility

   • Every merchant must have a unique MIC, which is linked to the mandate. Merchants can change their UPI ID without affecting active mandates, as long as the MIC remains correct.
   • Makes the merchant’s payment collection setup more flexible and resilient, ensuring uninterrupted collection even if the underlying UPI ID changes.
2. Introduction of Internet of Things (loT) Devices & Software on UPI Circle

   UPI Circle is a newly introduced feature that enables a primary UPI user (the main account holder) to safely share payment access with a trusted secondary user, such as a family member, or even extend it to a verified device or software profile. This delegation happens within predefined limits set by the primary account holder.

   The feature is particularly useful for managing expenses on behalf of individuals who either don’t have a bank account or lack direct UPI access. Throughout the process, the primary user maintains complete visibility and control over all transactions, ensuring both convenience and security in shared financial management.

   The enhancement extends the concept of delegation beyond just human secondary users to include non-human entities under a “Full Delegation” model:

   • IoT Devices: This includes smart devices like connected cars, smartwatches, smart TVs, or smart speakers. These devices can be authorized to make small, contextual payments autonomously (e.g., paying a toll from a connected car, or renewing a subscription directly from a smart TV).
   • Software Profiles: This refers to specialized, paid software applications or digital profiles (e.g., a shared family profile on an app) that are granted payment rights for specific, limited use cases.
3. Enabling Cash Withdrawal Through Micro ATM Using UPI at Business Correspondent (BC) Touch Points

   This process effectively allows a customer to use their UPI app to withdraw cash from their bank account at a Business Correspondent’s location (often a small local shop or agent) where a Micro ATM device is installed, without needing a physical debit card.

   Key Rules and Limits

   NPCI has established specific rules to govern these transactions, focusing on security and preventing misuse:

   • Mandatory 2FA: Every transaction requires 2-Factor Authentication (usually the UPI PIN) for enhanced security, ensuring the physical presence of the customer and their device.
   • Dynamic QR Code: Only dynamic UPI QR codes displayed on the Micro ATM device are permitted for these withdrawals.
   • Exclusions: UPI Lite accounts and credit accounts (like RuPay Credit Cards) are explicitly not allowed for cash withdrawals via Micro ATMs.
   • Transaction Limits:
     • Per Transaction Limit: ₹2,500
     • Daily Limit: ₹10,000
     • Monthly Limit: ₹25,000
4. Introduction of UPI HELP – Assistant pilot an Al Powered Support for UPI Payments:

   UPI HELP Assistant is an AI-powered assistant designed to help users with their UPI-related queries, complaints, and mandate management issues. Given that UPI processes billions of transactions monthly, an AI-driven system is essential to provide immediate support that human call centers can no longer handle efficiently alone.

   Core Functions of the AI Assistant:

   The assistant is being piloted to address three major user pain points:

   • Answer Questions: Providing immediate, contextual answers to common user queries about UPI features, limits, transaction status, etc.
   • Help with Complaints: Helping users in raising and tracking official complaints for failed transactions, incorrect debits, or other issues.
   • Manage UPI Mandates: Enabling actions related to recurring payments (AutoPay), such as pausing, resuming, or revoking a mandate.

Conclusion

The latest circulars from NPCI and RBI usher in a sophisticated era for the UPI platform. By integrating biometric technology, enabling complex account types like multi-signatory accounts, and expanding to crucial use cases like cash withdrawals and delegated payments (UPI Circle), UPI is transitioning from a basic payment system to a comprehensive digital financial ecosystem. These enhancements ensure that UPI remains at the forefront of global digital payments, setting new standards for accessibility, security, and user experience.

Abbreviations

1. UPI – Unified Payments Interface
2. VPA – Virtual Payment Address
3. NPCI – National Payments Corporation of India
4. RBI – Reserve Bank of India
5. PSP – Payment Service Providers
6. ATM – Automated Teller Machine
7. UIDAI – Unique Identification Authority of India
8. BC – Business Correspondent
9. IoT – Internet of Things
10. EMI – Equated Monthly Instalment
11. SIP – Systematic Investment Plan

References

1. bfsi.economictimes.indiatimes.com
2. UPI_OC_No_223_FY_2025_26_Enhancement_of_UPI_Autopay
3. Enabling_Cash_Withdrawal_through_Micro_ATM_using_UPI_at_Business_Correspondent_touch_points
4. UPI_OC_No_226_FY_2025_26_Introduction_of_Additional_Authentication_methods_in_UPI
5. UPI_OC_No_201_B_FY_2025_26_Addendum_to_NPCI_UPI_2024_25_OC_201_Introduction_of_Io_T_devices_software_on_UPI_Circle
6. UPI_OC_No_227_FY_2025_26_Introduction_of_UPI_HELP_Assistant_pilot_an_AI_powered_support_for_UPI_payments
7. UPI_OC_No_228_FY_2025_26_Enhancement_in_UPI_Single_Block_Multiple_Debits_UPI_Reserve_Pay

Disclaimer

The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. The content of this article is not intended to create and receipt of it does not constitute any relationship. Readers should not act upon this information without seeking professional legal counsel.