Digital money is rapidly evolving, and no market is quicker than India, with new rules under the UPI apps set to be implemented in August 2025. Fintech data security in India is becoming increasingly critical, as cyber threats are skyrocketing and regulatory requirements are on the rise. As a consumer or fintech startup, it is essential to be aware of the new TRAI UPI guidelines and best digital security practices to ensure safety and compliance.
Recent UPI Rule Amendments August 1, 2025
The Unified Payments Interface (UPI) system of India remains innovative, making billions of transactions each month. NPCI (National Payments Corporation of India) has successfully supported the safety and prevention of fraud by implementing significant changes to the rules governing the method, with a focus on enhancing user experience and security measures.
Summary of New UPI Rules
FeatureOld ProcessNew UPI Rules from August 1, 2025Recipient Name VisibilityOften hidden before the transactionThe registered name must be displayed before the transactionBalance Check LimitsUnlimited checks allowedMax 50 checks per app per day; restrictions during peak hoursTransaction Status UpdatesFrequently showed “pending”Must display success or failure within seconds; only 3 status checks allowed, 90 seconds apartPenalties for Non-ComplianceNo clearly defined penaltiesAPI access restrictions, onboarding suspensions, and fines imposedLinked Bank Account ViewsUnlimited access to linked accountsLimited to 25 views per app per day of linked bank accountsAutopay Retry AttemptsUnlimited retries allowedOnly one main attempt plus three retries allowed per mandateAutopay Timing RestrictionsAutopay allowed anytimeOnly at off-peak hours: 12 AM-7 AM (or before 10 AM, 1-5 PM, after 9:30 PM)
These enhancements make UPI safer and more scalable; this is why fintech data security in India is essential to each stakeholder.
Fintech Data Security in India—Fundamental Practices for 2025
Cyber risks in India are also growing in the fintech sector, where the average cost of a financial breach exceeds 5.9 million. Robust fintech data security in India not only helps avoid losses but also increases customer confidence and compliance with regulatory requirements.
7 Best Security Measures that a Fintech Company Should Prefer
1. End-to-End Data Encryption
Implement encryption on databases using the industry-standard AES-256 and secure all network communications with TLS 1.3.
Data in transit, at rest, and in use can be encrypted to prevent unauthorised access across systems, applications, and integrations.
2. Tokenisation of Sensitive Data
Real user credentials, account numbers, and payment information can be substituted with random tokens.
Store actual data in a vault secured cryptographically; this reduces the risk if your system goes down.
3. Multi-Factor Authentication (MFA)
Require passwords and biometric, OTP, or hardware authentication of all users, administrators, and APIs.
Avoid using SMS codes that are vulnerable to SIM swapping; choose an app or hardware authentication instead.
4. DevSecOps-Driven Development
Construct security testing, code scans, and vulnerability analysis into each stage of the product development.
Automate scans and security gates inside your CI/CD pipelines to identify bugs before launch and stay compliant with regulatory requirements.
5. Audit Trails and Secure Logging
Keep logs that specify every activity, organise logs for easy access, and never write sensitive information in logs.
Utilise immutable storage and set up an alert for suspicious activities. Maintain logs for 12 to 18 months to comply with audits.
6. Regulatory Compliance
Map your security program to frameworks like SOC 2, PCI DSS, and the most recent DPDP Act requirements.
Periodically review risk assessment, staff training, and documentation of policies and controls as evidence of compliance upon audit.
7. Regular Penetration Testing
Test your fintech systems well at least every quarter or after any significant update.
Identify areas of weakness and address them before your customers and regulators are exposed.
Regulatory Laws about Data Protection
The Digital Personal Data Protection Act (DPDP) in India goes into harsh enforcement in 2025:
The requirements for incident reporting and breach notification.
Crippling penalty for non-compliance.
Mid-sized fintechs and startups must adhere to best privacy practices, obtain express consent, update their policies, and conduct thorough data mapping.
These regulations are transforming fintech data security in India and data protection in India, as well as financial product innovation.
How Fintech Startups Can Build Security from Day One
With startups, we cannot afford to delay implementing robust fintech data security in India until the MVP stage. Key steps:
Key steps:
Implement encryption, backups, and access controls by using low-cost tools (Cloudflare, AWS Cognito, Let’s Encrypt).
Limit access to data and minimise data collection.
Institute safe coding conventions and backup, and follow up.
By developing secure systems in advance, startups can avoid the risks of breaches and regulatory trouble and gain the trust of partners and end-users.
Key Regulations Governing Fintech Data Security in India
Beyond UPI, laws shape fintech data security in India.
Digital Personal Data Protection Act (DPDP) 2023
The data rules are in the DPDP Act. Consent must be informed and voluntary. Companies delete unnecessary data. Data breaches can result in fines of up to INR 250 crores.
For fintech, this means strict financial info management, affecting apps like UPI providers.
RBI Guidelines and Data Localisation
The RBI sets the requirement in India to store data, which localises and protects information. Cybersecurity systems are mandatory.
Special permission is required for digital lending. Nothing like biometrics without regulations. These safeguard fintech data security in India.
Now the IT Act is put on layers. It penalises unauthorised access.
FAQs – Trending Questions on UPI Changes & Fintech Data Security in India
Q1: What are the key UPI rule changes in August 2025?Limits on balance checks/viewing each day, appointment time to run autopays, and a higher penalty regarding non-compliance.
Q2: What is the best data encryption method for fintech platforms?AES-256 for data storage and TLS 1.3 for secure communications are recommended standards in 2025.
Q3: Why is multi-factor authentication necessary for fintech apps?MFA introduces security layers, making account takeovers and unauthorised access significantly more complex to circumvent and becoming a legal requirement.
Q4: How do India’s new data privacy laws affect fintech companies?The DPDP Act is obligatory and requires specific breach notifications, thorough consent mechanisms, and regular audits, with non-compliance subject to penalties.
Q5: How often should fintechs run security audits and penetration tests?At least every quarter, or with a significant update, to keep up with data security regulations and best practices.
Conclusion
With the growing adoption of digital payments, everyone needs to adopt increased fintech data security in India. Until then, stay informed, invest in proven security measures, and cultivate a culture of data protection to achieve absolute peace of mind in the rapidly evolving fintech landscape in India.