UPI users on alert: Settlement rules to change from November 3; here's what can be expected

The National Payments Corporation of India (NPCI) will introduce new rules for Unified Payments Interface (UPI) settlements from November 3, aiming to make the process faster and more efficient for both banks and users.

At present, UPI operates 10 settlement cycles each day, with both authorised transactions — those approved by users — and dispute-related entries such as refunds and reversals processed together in every cycle. With UPI handling billions of payments every month, this combined processing had begun slowing down settlement finalisation. NPCI has now decided to ring-fence the two categories.

What’s changing

Under the revised framework, the 10 daily settlement cycles running between 9 am and 9 pm, in two-hour intervals, will be reserved exclusively for authorised transactions. Dispute settlements, meanwhile, will be processed in two separate windows: from midnight to 4 pm, and from 4 pm to midnight.

NPCI clarified that the change will not affect Real Time Gross Settlement (RTGS) posting timelines. Similarly, reconciliation reports, GST reports and other procedures will continue without modification. The only change is that refunds and reversals will now be processed exclusively in the two designated cycles.

Impact on users, banks

For most users, the experience of making payments at stores, online platforms, or through peer-to-peer transfers will remain unchanged. In fact, these transactions are expected to reflect faster in banks’ systems as they will no longer be competing with refund settlements within the same batch.

For dispute cases — such as a failed debit or double charge — refunds will now be cleared in one of the two dispute cycles. This, NPCI said, should bring greater predictability to when customers can expect money to be credited back into their accounts.

Banks, meanwhile, will benefit from lower congestion in reconciliation processes. By separating disputes from routine transactions, the new structure is designed to reduce bottlenecks, improve operational efficiency, and minimise the risk of settlement delays.

The overhaul comes at a time when UPI volumes are at record highs. In August, UPI crossed the 20-billion monthly transaction mark for the first time, processing payments worth Rs 24.85 trillion, according to NPCI data.

With digital payments now forming a backbone of India’s financial system, the sharper settlement structure is expected to provide a smoother experience for consumers while strengthening operational stability for banks.