UPI Transaction Limits for Special Merchants Set to Increase from Sept 15: Here’s What You Need to Know

The Unified Payments Interface (UPI) has transformed digital payments in India, becoming the preferred choice for millions due to its speed, convenience, and security. In response to growing market demand, the National Payments Corporation of India (NPCI) announced an increase in UPI transaction limits for specific merchant categories, effective from September 15, 2025. This blog details the new limits, affected sectors, compliance requirements, and their implications for users and merchants, based on the NPCI circular dated August 28, 2025.

Overview of the UPI Transaction Limit Increase

UPI’s popularity is evident from its record-breaking 20 billion transactions worth ₹25 lakh crore in August 2025. To accommodate high-value transactions, NPCI has raised the per-transaction limit for verified merchants in select categories from ₹1 lakh to ₹5 lakh, with some sectors capped at ₹2 lakh. This change aims to enhance convenience for businesses and customers while maintaining system efficiency.

New UPI Transaction Limits by Category

The enhanced limits apply only to verified merchants compliant with NPCI guidelines, as enforced by acquiring member banks. Below is a detailed breakdown of the new limits, effective September 15, 2025:

Category	Per-Transaction Limit	Cumulative Limit	Merchant Category Code (MCC)
Capital Market	₹5 lakh	₹10 lakh	MCC 6211, 6221
Insurance	₹5 lakh	₹10 lakh	MCC 6300
Government e-Marketplace (GeM)	₹5 lakh	₹10 lakh	MCC 9399
Travel	₹5 lakh	₹10 lakh	MCC 3000–3299, 4511, 4722
Credit Card Bill Payments	₹5 lakh	₹6 lakh	MCC 6012
Collections	₹5 lakh	₹10 lakh	MCC 6051
Business/Merchant	₹5 lakh	₹10 lakh	MCC 5999
FX Retail Use Case (via BBPS)	₹5 lakh	Not specified	MCC 6051
Term Deposit Digital Account Opening	₹5 lakh	Not specified	MCC 6010
Jewellery	₹2 lakh	Not specified	MCC 5094
Digital Account Opening (Initial Funding)	₹2 lakh	Not specified	MCC 6010

• Key Notes:
  • The standard UPI transaction limit remains ₹1 lakh per day for peer-to-peer (P2P) and most peer-to-merchant (P2M) transactions, with a maximum of 20 transactions daily.
  • Banks may set lower internal limits within NPCI’s ceilings, based on their policies.
  • Cumulative limits (e.g., ₹10 lakh for capital market, insurance) apply across transactions within a specified period, typically daily or monthly, depending on bank implementation.

Affected Sectors and Benefits

The increased limits target high-value transaction sectors, making UPI more viable for:

• Capital Market: Facilitates larger investments in stocks, mutual funds, or IPOs.
• Insurance: Simplifies premium payments for high-value policies.
• Government e-Marketplace: Supports bulk procurement by government entities.
• Travel: Enables seamless payments for expensive travel bookings, such as flights or tour packages.
• Credit Card Bills: Allows settling larger credit card dues via UPI.
• Jewellery and Digital Account Opening: Supports significant purchases or initial funding for savings/investment accounts.

This move enhances digital inclusion, reduces reliance on cash or other payment methods, and streamlines tax collection processes, as noted by Rahul Jain, CFO of NTT DATA Payment Services India.

Compliance and Implementation

• Merchant Verification: Only NPCI-compliant verified merchants qualify for the enhanced limits. Acquiring banks must ensure adherence to guidelines, including proper Merchant Category Code (MCC) allocation.
• System Updates: All UPI apps (e.g., PhonePe, Google Pay, Paytm) and payment service providers must update their systems by September 15, 2025, to support the new limits.
• Bank Discretion: Banks can impose stricter limits within NPCI’s framework, ensuring flexibility while maintaining security.

Implications for Users and Merchants

• For Users: Customers can make larger payments for services like tax payments, IPO subscriptions, or travel bookings without needing alternative payment methods. UPI remains free for P2P and P2M bank-to-bank transactions, though merchants may face interchange fees (0.5%–1.1%) for wallet-based transactions above ₹2,000.
• For Merchants: Verified merchants in high-value sectors benefit from increased transaction capacity, potentially boosting business. Small merchants (turnover < ₹20 lakh) are exempt from interchange fees for transactions below ₹2,000.
• Security and Efficiency: NPCI’s Transaction Credit Confirmation (TCC) system, effective February 15, 2025, reduces chargeback disputes, ensuring smoother transactions. Enhanced security measures, like two-factor authentication and real-time fraud monitoring, continue to protect users.

What You Should Do

• Merchants: Verify your NPCI compliance status with your acquiring bank to access higher limits. Update your UPI systems by September 15, 2025, and confirm your MCC aligns with your business category.
• Users: Check with your bank or UPI app for specific limits, as they may vary. Use trusted apps and verify recipient details to ensure secure transactions.
• Stay Informed: Monitor NPCI and RBI updates for further changes, as the digital payment ecosystem evolves.

Conclusion

The increase in UPI transaction limits for special merchants from September 15, 2025, marks a significant step toward supporting India’s digital economy. By enabling higher-value transactions in key sectors, NPCI ensures UPI remains a versatile and inclusive payment platform. Whether you’re a merchant or a user, understanding these changes will help you leverage UPI’s full potential. For the latest updates, refer to NPCI’s official website or consult your bank.

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