UPI AutoPay, introduced by the NPCI in 2020, was designed to address this gap by enabling automated recurring payments through the UPI ecosystem. At the core of this system are UPI mandates – user-authorized agreements that power these automated transactions. Understanding how these mandates work is key to unlocking the full potential of UPI AutoPay for both businesses and users.
What are UPI Mandates?
They are pre-approved payments that customers authorize via their UPI apps, allowing businesses to automatically debit payments at scheduled intervals. This mechanism not only simplifies the payment process for consumers but also ensures timely payments for businesses, enhancing cash flow and reducing service interruptions.
How UPI Autopay Mandates Work?
The UPI AutoPay process primarily revolves around mandate creation and authorization, which occur seamlessly through the user’s UPI app:
Mandate Creation:
The business initiates a mandate request with the payment amount, frequency, and schedule details. This sets up the framework for automated recurring payments.
Mandate Authorization:
To activate the mandate, the customer enters their UPI PIN just once. This one-time authentication registers the instruction with their bank, enabling future payments to occur automatically as scheduled.
The entire process is digital, secure, and user-controlled ensuring high success rates and a frictionless experience for both businesses and customers.
UPI Autopay creates value for both businesses and consumers by removing friction from recurring transactions.
For Businesses
1. Steady and Predictable Cash Flow:
Auto-debit ensures timely and consistent payment collections without the need for manual nudges or follow-ups.
2. Higher Customer Retention:
Once a mandate is in place, customers are less likely to miss payments, reducing churn and improving lifetime value.
3. Operational Efficiency:
Automated collections reduce the burden on support, billing, and finance teams, freeing up resources for core business functions.
4. Fewer Payment Failures:
With funds debited directly from the customer’s bank account, issues like expired cards or low wallet balances are eliminated, resulting in higher transaction success rates.
For Consumers
1. Effortless Convenience:
No more setting reminders or repeating the same steps-recurring payments happen automatically, right on schedule.
2. Full Control Over Payments:
Customers can modify, pause, or cancel mandates anytime directly from their UPI app, putting them in charge at all times.
3. Built-In Transparency:
Every transaction is preceded by a notification, and users can view mandate details or history anytime ensuring total clarity and peace of mind.
Here’s a use case to better understand
An OTT platform like Disney+Hotstar offers monthly or yearly subscriptions:
When users sign up, they are shown a simple “Pay with UPI AutoPay” option.
Customers approve a recurring payment mandate through their UPI app (like PhonePe).
Every month, the subscription fee is auto-deducted without needing customer action.
Customers can pause or cancel anytime from their UPI app.
Business Impact: Fewer subscription drop-offs, higher renewal rates, and predictable monthly revenue.
Key Considerations When Offering UPI AutoPay
1. Mandate Limit Restrictions:
UPI AutoPay currently supports mandates of up to ₹1 lakh per transaction, as per NPCI guidelines. For amounts above this threshold, customers must manually authenticate each payment using their UPI PIN. If your offerings include high-value plans like insurance premiums or EMIs consider providing alternate payment options or structuring plans within the limit to avoid mandate failures.
2. Building Customer Trust:
Some users may hesitate to authorize automatic debits. To address this, businesses should clearly explain how mandates work, what can be modified, and how cancellations can be done anytime via the UPI app (e.g., PhonePe). Transparency and upfront communication are key to driving adoption and reducing drop-offs.
3. Handling Failed Mandates:
When a scheduled debit fails due to insufficient funds, businesses should implement their own retry logic or reminder systems to recover failed payments and minimize revenue loss.
4. Ensuring Regulatory Compliance:
The Reserve Bank of India mandates customer notifications before each debit and strict record-keeping for mandate activity. Ensure your system complies with these requirements and that you maintain audit-ready logs of mandate authorizations, modifications, and cancellations.
Conclusion
Recurring payments in India have entered a new phase with UPI AutoPay. It’s already gaining ground across various key sectors. As the ecosystem evolves with expected enhancements like higher mandate limits and smarter retry flows, UPI AutoPay is set to support more complex and high-value use cases.
For businesses, it ensures predictable cash flow, reduces operational overhead, and enhances the overall customer experience. To implement this at scale, you need a solution that’s proven, reliable, and built for India. UPI AutoPay by PhonePe Payment Gateway offers just that with rapid onboarding, robust APIs, and the trust of one of the country’s most widely used UPI platforms.
