New UPI API Rules? Here’s How Business Observability Keeps You Ready
- Jun 3, 2025
- Blogs
- 5 min read
Last week, India’s leading payment nodal agency released an important guideline pertaining to the usage of UPI APIs by ecosystem participants (banks, PSPs, third-party apps, etc.). As UPI continues to grow at an unprecedented scale, these guidelines focus on enhancing system resilience, fairness, and compliance across PSPs, acquiring banks, and third-party app providers.
The circular outlines strict controls around API usage, retry logic, system load management, and auditability, thereby placing new expectations on operational discipline and transparency. For banks, we should consider these guidelines as a call to adopt deeper visibility and control over their digital transaction infrastructure.
The UPI Scale: A Complex, Evolving Organism
UPI is now the backbone of digital payments in India with over 18 billion monthly transactions and integrations across hundreds of banks, fintechs, and merchants.
But with that scale comes complexity.
- Every balance check, transaction status retry, and account key lookup adds systemic load.
- Multiple third-party applications interacting via open APIs increase points of failure.
- Without clear visibility, minor glitches can snowball into outages, missed SLAs, or regulatory non-compliance.
Key Instant Payment Guidelines and Where Observability Comes In
The latest circular calls for:
- Rate-limiting and retry restrictions
- Separation of system-initiated vs user-initiated calls
- Time-bound use of APIs
- Audit trails and compliance confirmations
These guidelines demand real-time operational control, insight, and actionability, which is precisely what VuNet’s Business Observability Platform enables.
Here is how Banks/PSPs can leverage Observability (especially in the audit report banks have to submit back to the nodal agency)
1. Banks can configure alerts when
- TPS approaches 80% of the cap (early warning).
- Retry rates are abnormally high (could indicate abuse or failure loops).
- A single app or user is approaching limits.
2. Requires regular submission of reports around API usage. Observability platforms:
- Can persist and roll up historical data to report:
3. If the enforcement is done via rate-limiter middleware or a throttling queue, the observability layer can show:
- How many requests are being allowed vs rejected per rule?
- Which rules are being triggered most often?
- If users are being backed off properly during overload (e.g., retries suppressed after X attempts).
- Audit Use: Helps regulators understand if enforcement is active and effective, not just configured
Here’s a breakdown of the most relevant guidelines and how VuNet helps address them:
How Business Observability Helps You Navigate New API Guidelines
New Guideline | Relevance | How VuNet Helps |
Cap on Balance Enquiry API (50 calls per app/user/day) | Controls unnecessary load on banking systems | Tracks per-user balance enquiry API usage, flags violations, and triggers alerts when nearing limits |
Time-bound use of ‘List Keys’ & ‘List Account’ APIs (non-peak hours only) | Ensures non-critical operations don’t burden the system during peak times | Detects time-of-day API usage patterns; dashboards highlight violations and help teams optimize API schedules |
Check Status API: 90s delay for first call, 45–60s gaps thereafter | Reduces excessive API calls during pending transactions | Monitors check-status invocation timestamps; automatically identifies early/rapid retries violating guidelines |
Retry Cap: Max 3 retries per transaction | Prevents API overload and redundancy | Tracks retries per txn ID; contextual view of retry attempts with alerts when limits are breached |
Avoid retries on known error codes (e.g., U68, U69, U70) | Reduces wasteful retries on terminal errors | Uses intelligent log parsing to correlate specific error codes and indicate suppression of further check-status calls |
Rate Limits and Velocity Thresholds | Maintains platform stability by limiting TPS | Real-time monitoring of API TPS per service/app; alerting on breaches, and anomaly detection for rate spikes |
Audit Trail (CERT-In empanelled audit readiness) | Mandated evidence of secure and compliant API usage | Persists secure, time-stamped logs and structured reports for every API call — readily available for audit teams |
Transaction Classification: Customer-initiated vs System-initiated calls | Ensures only user-triggered balance queries are permitted | Captures the source of initiation (user/system); classifies and flags non-compliant automated API calls |
No Unauthorized API Usage | Prevents abuse and ensures system integrity | Continuous correlation of API usage with approved workflows; flags unauthorized or unusual patterns |
Non-Compliance Risk (penalties, API access suspension) | Drives urgency for operational observability and control | Ensures end-to-end visibility into the UPI journey, enabling faster detection and resolution of compliance issues |
Why Compliance in the UPI Ecosystem Is Not Optional
Non-compliance with these API guidelines carries real business consequences: from penalties to access restrictions to reputational risk. But beyond compliance, resilient API operations are foundational to customer trust, whether it’s a high-value merchant payout or a simple balance check.
VuNet’s observability layer helps banks detect, react, anticipate, and optimize, shifting from reactive firefighting to proactive governance.
Conclusion: Observability Is the New Compliance Ally
As UPI matures into a public digital utility, operational excellence will depend on deep observability, smart controls, and business-aligned insights. The new guidelines on instant payments reflect this shift.
At VuNet, we work with leading banks to power real-time observability into every transaction, API call, and system component—ensuring they remain compliant, performant, and trusted in an always-on digital economy.
