Why UPI Limits Changed and What It Means
UPI has evolved from a simple money-transfer system to India’s default digital payments rail for everything—from groceries to investments. As transaction volumes crossed 500 million per day by 2025, NPCI recognised that many users and merchants still relied on NEFT, RTGS, or card networks for large-ticket payments. To close this gap, new UPI limit enhancements took effect on 15 September 2025, expanding the scope of high-value digital payments.
The rule change wasn’t just about convenience; it was about enabling UPI to participate in formal, high-value financial flows. Under India’s digital public infrastructure, UPI is already used for recurring mandates, EMI repayments, auto-pay utilities, and bill payments. The category-wise enhancements now allow high-value flows—such as mutual fund purchases, credit card bill payments, insurance premiums, and travel bookings—to shift onto UPI rails as long as the merchant belongs to an eligible category defined inside the updated NPCI frameworks for Upi High Value Payments.
In practice, this means UPI is transitioning from a “daily essentials” payment tool into a unified flow for both retail and large-value transactions. The change also aligns with India’s broader goals: reduce friction in digital commerce, improve settlement transparency, and provide users with a familiar, secure interface even for high-value spending.
For merchants, higher limits unlock a smoother checkout experience and reduce failure rates during peak sales events. Sectors like insurance, travel, government payments, and capital markets stand to benefit immediately, as these flows often require amounts exceeding the traditional ₹1 lakh cap.
Insight: UPI is no longer “small payments only.” With category-linked approvals, it is becoming an interoperable alternative to NEFT, net banking, and debit cards for high-value retail spends.However, the increased limits do NOT apply universally. Only merchants verified under the appropriate MCC (Merchant Category Code) can receive amounts above the older thresholds. This ensures controlled risk, traceability, and category-specific oversight.
New Limits by Category: What You Can Pay Now
India’s updated UPI rulebook has introduced some of the highest per-transaction retail limits seen globally. The enhancements apply to P2M (person-to-merchant) flows only, and only for categories listed in NPCI's updated merchant directory. The eligibility is based on verification under the structured taxonomy defined within Npci Upi Merchant Categories.
Here is the expanded, user-friendly breakdown of limits effective from 15 September 2025. These final ceilings are common across UPI apps, but your bank may enforce a lower internal limit depending on its risk scoring.
| Merchant Category | Per-Transaction Limit | Daily / Aggregate Notes |
|---|---|---|
| Capital Market Investments (Mutual Funds, Broking, IPO) | ₹5 lakh | ₹10 lakh / 24 hours |
| Insurance Premium Payments (Life, Health, General) | ₹5 lakh | ₹10 lakh |
| Government Fees / Taxes / e-Marketplace | ₹5 lakh | ₹10 lakh |
| Travel and Hospitality (MCC-linked verified merchants) | ₹5 lakh | ₹10 lakh |
| Credit Card Bill Payments | ₹5 lakh | ₹6 lakh |
| Loan Collections / EMI Payments / B2B Flows | ₹5 lakh | ₹10 lakh |
| Jewellery & Precious Metals | ₹2 lakh (₹5 lakh in select verified cases) | ₹6 lakh |
| FX Retail via BBPS / Digital Account Opening / Term Deposits | ₹5 lakh | ₹5 lakh |
| Initial Funding for Digital Account Opening | ₹2 lakh | ₹2 lakh |
The structure lets users make major financial decisions—like paying a large insurance premium or investing in mutual funds—in a single UPI transaction. It reduces friction, eliminates manual stepping into net banking portals, and speeds up both merchant reconciliation and user confirmation.
Merchants, meanwhile, gain access to a more predictable, high-throughput settlement layer. Airlines, travel aggregators, government portals, and financial institutions are already reporting noticeable reductions in failed transactions during peak times, as UPI handles large amounts with streamlined authentication.
Tip: If your UPI payment above ₹1 lakh fails, check whether the merchant is registered under the enhanced MCC list — not all categories qualify automatically.Another important change is compliance. High-value UPI flows undergo more sophisticated risk checks, including enhanced fraud scoring, per-category velocity limits, and merchant-level verification. These help maintain safety as the ecosystem scales to multi-lakh transactions.
P2P Payments: What Still Doesn’t Change
Despite speculation, UPI’s increase in merchant limits does not extend to person-to-person (P2P) transfers. If you are simply sending money to a friend, family member, colleague, or personal contact, the limit remains ₹1 lakh per day. This separation between P2M and P2P ensures that the higher ceilings are used only for regulated, high-trust merchant flows—reducing misuse and protecting consumer interest. The unchanged policies surrounding interpersonal transfers are clearly outlined in Upi P2P Limit Unchanged.
P2P limits remain stable because these flows carry higher risk of fraud, mule account activity, and unverified counterparty exposure. Meanwhile, UPI’s design ensures that verified merchant categories undergo onboarding due diligence, enabling higher ceilings with lower relative risk.
The distinction also helps banks balance load across UPI rails. High-velocity P2P transfers could introduce excessive risk if limits were raised universally, especially during peak salary cycles or festival periods.
For everyday users, the rule is simple: P2M = up to ₹5 lakh or more (for eligible categories). P2P = still ₹1 lakh/day.
How to Check & Use the Higher Limits Safely
With the new limit structure, users must understand how to verify eligibility, avoid transaction failures, and ensure safe high-value usage. These guidelines — also aligned with India's digital safety recommendations found inside Upi User Safety Tips — help avoid common errors and maximise success rates.
Here’s how to confidently use higher UPI limits:
- Check merchant verification status: Most UPI apps display whether a merchant is “verified” or “eligible for high-value payments.” If the category isn’t recognised, the transaction may fail.
- Understand your bank’s internal caps: Even if NPCI permits ₹5 lakh, your bank might have a smaller threshold. Review your app, bank website, or UPI support centre to confirm.
- Use P2M flow, not P2P: The “Send Money” option usually defaults to P2P. High-value transactions must be initiated using the merchant’s UPI QR/UPI ID.
- Ensure your KYC is updated: Many banks now require full KYC and risk profiling before enabling transactions above ₹1 lakh.
- Expect extra verification: For amounts above ₹2 lakh, some UPI apps may prompt additional authentication or secure device binding as a fraud-prevention step.
- Avoid peak congestion hours: Payment traffic surges can slow processing. For urgent large-value transactions, aim for off-peak windows.
- Monitor transaction status: Large UPI payments include auto-refund protections, but failure reporting may take longer due to back-end checks.
Ultimately, UPI’s evolving rules reflect its growing role as India’s universal payment interface—not just for microtransactions but for large, regulated financial flows. As limits expand further in the coming years, expect more sectors—education, healthcare, premium retail, and cross-border corridors—to migrate toward UPI-based settlement.
With the 2025 category-wise upgrades, UPI has officially entered the high-value era—bringing speed, trust, and interoperability to India’s biggest digital transactions.
Frequently Asked Questions
1. Do the new UPI limits apply to all merchants?
No. They apply only to verified merchants in specific NPCI-listed categories (MCCs). Others continue under standard UPI limits.
2. Can I send ₹5 lakh to my friend via UPI now?
No. The enhanced limits apply only to P2M payments. P2P transfers remain capped at ₹1 lakh/day.
3. When did these changes take effect?
The updated category-wise limits took effect on 15 September 2025.
4. Can my bank restrict the limit further?
Yes. Banks and PSPs may apply lower internal thresholds based on their risk policies, even when NPCI permits higher ceilings.
5. What happens if a high-value UPI transaction fails?
It may fail because the merchant is not verified, your bank has a lower cap, the payment was initiated as P2P, or additional authentication was required.