UPI Autopay Gains for Subscription Models
UPI Autopay is emerging as a key tool for Indian merchants to retain subscription customers. The feature helps reduce churn by automating recurring payments and boasts lower failure rates compared to card-based mandates, simplifying onboarding for services like curated weekly grocery baskets.
Launched by the National Payments Corporation of India (NPCI) on July 22, 2020, UPI AutoPay was designed to create a streamlined system for recurring payments. Its adoption accelerated significantly following the Reserve Bank of India's (RBI) 2021 e-mandate guidelines, which required an additional factor of authentication for many card-based recurring transactions, causing failure rates for card mandates to spike above 20%. The growth has been explosive, with recurring payments made via UPI Autopay doubling in the last year alone. Transaction volumes surged to 175 million in January 2025, a threefold increase from 58 million in January 2024. This rapid uptake saw UPI AutoPay's share of the recurring payments market jump from 33% to over 53% in the same period, while card-based payments fell from 42% to 31%. A key driver for merchants is cost savings, as UPI transactions do not carry a Merchant Discount Rate (MDR), unlike the 1.5-2% fee common with card payments. This advantage has led businesses to favor UPI Autopay to tap into a much larger user base of approximately 40 crore UPI users, compared to about 5 crore unique credit card holders in India. Regulatory adjustments have expanded its utility. The transaction limit for recurring payments without requiring a UPI PIN for authentication has been raised from ₹15,000 to ₹1 lakh for specific categories, including insurance premiums, mutual fund investments, and credit card bill payments, following an RBI directive in December 2023. However, the system has faced challenges. In August 2025, reports indicated high failure rates for automated debits, sometimes between 55% and 90%, often due to insufficient bank balances. In response to rising user complaints about erroneous debits, unclear mandate creation, and difficulties in cancellation, the RBI directed the NPCI in early 2026 to review the UPI Autopay framework. To improve performance, the NPCI has restricted debit processing to specific non-peak hours and mandated that users must be able to view and manage all active mandates from any UPI app.
