UPI Charges - Understand All about UPI Transaction Charges

10 January, 2024

Synopsis

Unified Payment Interface (UPI) is a real-time payment system developed by NPCI, enabling secure, instant transactions without additional fees for most consumers.
UPI transactions can be initiated via virtual IDs, account numbers, IFSC codes, or Aadhaar, with daily limits of ₹1,00,000 for general use and higher limits for specific categories.
While UPI transactions remain free for customers, an interchange fee of 1.1% applies to PPI transactions exceeding ₹2,000, effective April 2023, but customers are not liable for this fee.

Developed by the National Payment Corporation of India (NPCI), UPI enables real-time fund transfers between two accounts through mobile devices. Also known as Unified Payment Interface, this payment system makes it extremely convenient to make payments instantly and digitally. One of the compelling reasons for UPI’s immense popularity is that you don’t have to pay additional fees or charges for money transfers and payments. A recent notification from the NPCI talks about the applicability of an interchange fee on certain UPI transactions. Keep reading on to know more about UPI charges and whether they impact you.

How Do UPI Payments Work?

The interface is regulated by the central bank of India, i.e., the Reserve Bank of India (RBI), and is considered a secure method to send and receive money without using cash and Credit/Debit Cards or going to a bank.

You can make UPI payments via the following channels:

Virtual IDs including virtual payment addresses (VPA) and QR codes
Account number and IFSC code
Aadhaar number

Please note that the easy nature of UPI payments (with no charges) can contribute to people making errors while making a transaction. Thus, you are advised to pay caution while verifying UPI ID or other identifying details about the payee as there is no way to stop/cancel a UPI transaction that has been initiated.

What Are the UPI Transaction Limits?

Per NPCI, the daily transaction limit for UPI is ₹1,00,000 for general transactions, ₹2,00,000 for categories like capital markets, and insurance, and ₹5,00,000 for merchant transactions and Initial Public Offering (IPO).

However, the maximum UPI transfer limit for a day can change from bank to bank and usually ranges from ₹25,000 to ₹1,00,000. Depending on the bank, you may have a weekly/monthly transaction limit instead of a daily transaction limit.

Are There Any Charges on UPI Payments?

The short answer is no; there is zero charge for UPI transactions for consumers. You do not have to pay additional charges on peer-to-peer (P2P) and peer-to-merchant (P2M) transactions. However, according to the new UPI guidelines, an interchange fee of 1.1% on UPI transactions exceeding ₹2,000, from 1st April 2023. This rule applies to transactions made via prepaid payment instruments (PPI).

What are PPIs?

PPIs or prepaid payment instruments allow you to make purchases and carry out other financial transactions against money stored in the instrument. A prepaid wallet is an example of PPI in which you load money and make various transactions. You can view these transactions in the prepaid wallet app.

What is an Interchange Fee?

Interchange fee is a type of transaction fee that a merchant must pay to the payment service provider. When you pay a merchant using a prepaid wallet, the merchant must pay the prepaid wallet service provider a fee, which is the interchange fee.

Do Customers Have To Pay The Interchange Fee?

Note that customers paying the merchants, regardless of the payment instrument they use, are not required to pay the interchange fee. As a customer, you do not have to bear the cost of PPI transactions.

How to Start Making UPI Transactions on PayZapp?

If you don’t already have PayZapp on your device, you can use the following steps to start making zero-charge UPI transactions:

Download PayZapp from the App Store (iOS devices) or Google Play Store (Android devices).
Verify your SIM card and device.
Link your bank accounts, Debit and Credit Cards so that you have multiple payment options.
Set UPI PIN for new UPI IDs.
Click on ‘Send Money’ or ‘Scan QR code to pay’ to send money
Identify the payee by entering their UPI ID, number, etc.
Type in the amount you wish to send and click ‘Pay’.
Enter your 4- or 6-digit UPI PIN to complete the transaction.

You will receive a notification soon after the transaction is done to tell you whether it was successful, failed, or pending approval. You can view your transactions in the Passbook section.
Click here to make online payment through payZapp on your IOS phone
Click here to pay online through PayZapp on your Android phone.

Takeaway

UPI transaction charges are generally zero for customers; however, merchants may have to pay a very small amount if the customer is paying from their PPI wallet. Many payment gateways don’t charge any transaction fee if you pay using UPI.

You can download one of the most secure and convenient UPI apps—PayZapp—to start making online payments with no charges.

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.