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UPI Transaction Charges

UPI Transaction Charges

UPI charges refer to the fees or costs associated with using the Unified Payments Interface (UPI) system in India. UPI is a real-time payment system developed by the National Payments Corporation of India (NPCI) that allows users to transfer money between bank accounts using their mobile phones instantly. It has gained significant popularity due to its convenience and ease of use.

While the UPI platform does not charge fees for fund transfers, banks and third-party service providers may impose certain charges for specific transactions or value-added services. These charges can vary depending on the bank or service provider, and users need to be aware of them to make informed decisions.

Charges on Sending Money via UPI

According to NPCI, the daily UPI transaction cap is set at Rs. 1 lakh. For merchants and bill payments, the cap is Rs. 5 lakhs. Depending on the bank, the maximum UPI daily transfer limit may range from Rs. 25,000 to Rs. 1 lakh.

Some banks have also imposed weekly or monthly UPI transfer caps rather than daily ones. For instance, the IDFC bank's UPI restriction is Rs. 1 lakh each week, while the bank's UPI transaction maximum is Rs. 30 lakh per month.

Charges on Receiving Money 

The interchange fees in UPI transactions are the costs a merchant incurs when a customer completes a transaction. As a result, the merchant must pay the interchange charge to PhonePe, the payment service provider, when a customer uses a PhonePe QR code to make a UPI payment at a business. 

The interchange fee is applicable in the range of 0.5-1.1% on various services. Fuel payments are subject to a 0.5% interchange fee, 0.7% for the post office, telecom, utilities, agriculture, and education, 0.9% for payments at supermarkets, and 1% for payments to insurance, mutual funds, the government, and railroads.

UPI Transaction Charge Details  

Transaction Fee

UPI transactions generally do not involve any transaction fee for users. The National Payments Corporation of India (NPCI), the governing body for UPI, has mandated that banks and payment service providers should not charge customers for UPI transactions. This ensures that users can make person-to-person (P2P) and person-to-merchant (P2M) payments without incurring any additional costs.


While most UPI transactions are free of charge, some banks or payment service providers may levy nominal fees for certain types of transactions. These exceptions typically include services like transferring funds from UPI to a different payment platform or withdrawing money from UPI to a bank account. It is essential to check with your bank or payment service provider for any specific charges associated with these transactions.

Regulatory Framework

NPCI Guidelines

The NPCI, as UPI's governing body, ensures the platform's smooth functioning and security. They establish regulations and guidelines for banks and payment service providers. These guidelines focus on transaction limits, security protocols, dispute resolution, and customer protection measures.

Transaction Limits

NPCI sets transaction limits for UPI to maintain security and prevent misuse. Currently, the transaction limit for UPI is set at ₹2 lakhs per transaction for individual users. However, individual banks may impose lower limits depending on their risk management policies. You should check with your bank to understand the specific transaction limits applicable to you.

Security and Customer Protection

To ensure the security of UPI transactions, the NPCI mandates robust authentication measures, such as multi-factor authentication and secure PINs. Additionally, banks and payment service providers are required to implement strong security protocols and encryption standards to safeguard user data and prevent unauthorised access.

Dispute Resolution

In case of any disputes or fraudulent activities related to UPI transactions, the NPCI has established a dispute resolution framework. Users can approach their respective banks or payment service providers to raise complaints or seek resolution for any transaction-related issues.

Charges on UPI Transaction By NPCI

The National Payments Corporation of India (NPCI) plays a pivotal role in regulating and overseeing the Unified Payments Interface (UPI) system in India. As part of its responsibilities, the NPCI has established guidelines and transaction charges for UPI transactions. This article aims to provide a clear understanding of the UPI transaction charges set by the NPCI, enabling users to stay informed about the costs associated with UPI transactions.

Transaction Charges for UPI

Person-to-Person (P2P) Transactions

The NPCI has mandated that banks and payment service providers should not levy any charges on P2P UPI transactions. This means that users can transfer funds from their bank accounts to other individuals without incurring any transaction fees.

Person-to-Merchant (P2M) Transactions

Similar to P2P transactions, the NPCI has directed that there should be no transaction charges for P2M UPI transactions. This allows users to make seamless payments to merchants or service providers without any additional costs.

Exceptions and Additional Charges

Third-Party Applications

While the NPCI guidelines ensure that UPI transactions remain free of charge, it is important to note that certain third-party applications or platforms may introduce their own transaction fees. Users should carefully review the terms and conditions of such applications to understand any additional charges that may be applicable.

Bank-Specific Charges

While the NPCI's guidelines discourage banks from imposing charges on UPI transactions, there may be instances where individual banks choose to introduce certain fees. Users should consult with their respective banks to ascertain if bank-specific charges apply to their UPI transactions.

Transaction Limits

The NPCI has established transaction limits to ensure the security and integrity of UPI transactions. As of the latest guidelines, the transaction limit for UPI is set at ₹2 lakhs per transaction for individual users. However, it is important to note that banks may impose lower transaction limits based on their risk management policies. Users should verify the specific transaction limits applicable to their accounts with their respective banks.

What is a Prepaid Payment Instrument (PPI) in UPI?

A prepaid payment instrument (PPI) in the context of the Unified Payments Interface (UPI) refers to a digital payment method that allows users to load funds onto a virtual wallet or account. This prepaid amount can then be used for various transactions, including making payments to merchants, transferring funds to other individuals, or purchasing goods and services online. PPIs offer a convenient and secure alternative to traditional payment methods and have gained popularity in the digital payment landscape.

PPIs come in different forms, including mobile wallets, prepaid cards, and virtual accounts. Banks typically issue these instruments, non-banking financial companies (NBFCs), or other authorised entities that comply with the regulatory framework set by the Reserve Bank of India (RBI). They operate within the guidelines and regulations defined by the RBI to ensure user protection and secure transactions.

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On UPI transactions over Rs. 2,000 made through PPIs, the NPCI has recommended an interchange fee of up to 1.1%. This new regulation will take effect on April 1, 2023. By September 30th, 2023, the interchange pricing will be revised. 

Customers that make UPI payments through PPIs for peer-to-peer (P2P) and peer-to-merchant (P2M) transactions won't have to pay interchange fees. P2P transactions refer to money transfers via UPI between two people or individual accounts. Customers pay merchants for purchases over UPI in a P2M transaction.

For executing a transaction, one bank bills another bank an interchange fee. In UPI transactions, the payer bank (the person making the payment) receives the interchange charge from the merchant bank (the company or person receiving the payment).

Customers are not charged because interchange fees only apply to PPI merchant transactions. When the UPI is linked to a bank, customers or users do not have to pay interchange fees for the UPI payments. The merchant will pay the interchange fee as soon as the UPI is connected to the wallet. The interchange fee will not impact customers if they use UPI to send money to their loved ones, friends, coworkers, or the merchant's bank account. 

Frequently Asked Questions (FAQs)

How many UPI transactions are free?

There is no fee on UPI transactions as of now. 

Is there any tax on UPI transactions?

No, there is no tax levied on UPI Transactions.

What are the charges for Phonepe and Google Pay?

The current fixed UPI Free Limit for Gpay, Phonepe, Paytm, and BharatPe is 2000. You must deduct 1.1% from your account balance if you want to transfer or conduct a transaction for an amount greater than this. The NPCI is now claiming that these costs will be levied against the Merchant and not the Payee, the End Consumer.

Does UPI have a transaction limit?

Yes,  the daily UPI transaction cap is set at Rs. 1 lakh; for merchants and bill payments, the cap is Rs. 5 lakhs.

Can the transaction charges for UPI transactions be waived or reduced?

No, there is no way to waive or reduce UPI payment charges.

Are there any transaction charges for UPI transactions between different banks?

No, currently, there are no transaction charges for UPI payments between different banks.

Are there different transaction charges for different UPI apps?

Yes, there are some transaction charges for UPIs which are only applicable to merchants. It ranges from 0.5% to 1.1%, and in some categories, a cap is also applicable.

Do the transaction charges vary based on the transaction amount?

Every time a company processes a customer’s payment, it must pay a transaction fee. The transaction charge will have a different price depending on the service chosen.

Are there any transaction charges for UPI transactions made for bill payments or recharges?

No transaction charges are applicable for customers who pay their bills and do recharge through UPI applications.