Unified Payments Interface (UPI) has revolutionized digital transactions in India by offering fast, seamless, and often free payments. However, recent discussions about UPI payment charges have sparked curiosity and concern among users. Are UPI payments still free, or do they come with hidden costs? In this article, we break down UPI payment charges and help you understand how they affect your transactions.

Are UPI Payments Free for Individuals?

For individual users, most UPI transactions remain free when transferring money between bank accounts using UPI apps such as Google Pay, PhonePe, Paytm, and BHIM UPI. The Indian government and the Reserve Bank of India (RBI) have maintained a zero-charge policy for person-to-person (P2P) UPI transactions to promote digital payments.

However, some additional services and scenarios might attract charges.

UPI Payment Charges: When Do You Have to Pay?

While standard UPI payments are generally free, the following cases may involve charges:

1. UPI Transactions via Wallets or Prepaid Instruments

• If you transfer money from a UPI-linked wallet (e.g., Paytm Wallet, Amazon Pay Balance) to a bank account, service charges may apply.
• Wallet-to-bank transfers often attract a 1% to 3% fee depending on the provider.

2. Merchant Transactions (P2M Payments)

• Payments made to merchants using UPI might be subject to charges, especially if businesses receive payments through credit lines, wallets, or prepaid accounts.
• As per NPCI guidelines, merchant transactions above ₹2,000 via Prepaid Payment Instruments (PPIs) may be subject to an interchange fee of 1.1%.

3. UPI Payments Using Credit Cards

• Recently, RBI has allowed the linking of Rupay Credit Cards with UPI. While direct bank-to-bank transactions via UPI are free, using a credit card for UPI payments may attract standard credit card processing fees, typically ranging from 1.5% to 2.5%.

4. Cross-Border UPI Transactions

• International UPI payments, such as transactions made in countries supporting UPI, may have foreign exchange markup fees.
• Service providers may charge 2% to 5% for cross-border transactions.

How UPI Charges Affect Businesses

For businesses, UPI payment charges can vary based on the type of transaction:

• Small businesses and individual merchants: Many banks and UPI service providers offer free or low-cost UPI acceptance.
• Large enterprises: Some UPI-based payment gateways charge a processing fee for high-volume transactions, typically ranging from 0.3% to 1%.

Future of UPI Payment Charges

The Indian government continues to support UPI as a low-cost digital payment system. However, banks and payment service providers may introduce nominal charges for specific UPI services in the future to cover operational costs. The RBI and NPCI regularly update guidelines, so users should stay informed about potential fee changes.

Conclusion

For most users, UPI payments remain free for standard transactions between bank accounts. However, certain services, such as prepaid wallets, merchant transactions, credit card-linked UPI payments, and international transfers, may incur charges. Keeping track of updated UPI policies will help users make informed payment decisions and avoid unnecessary fees.

FAQs

1. Do banks charge for UPI transactions?

No, banks do not charge for standard UPI transactions between accounts. However, prepaid wallet payments and credit card-linked UPI transactions may have charges.

2. Are there any charges for UPI payments above ₹2,000?

For regular bank-to-bank transfers, no. However, if using prepaid payment instruments (PPIs) like wallets, an interchange fee of 1.1% may apply for merchant transactions above ₹2,000.

3. Will UPI payments remain free in the future?

The government has assured that UPI payments will continue to be free for individuals, though businesses and premium services might see minor charges in the future.