The Unified Payments Interface (UPI) has revolutionized digital transactions in India, making it easy, fast, and mostly free to send and receive money. However, recent updates have introduced UPI payment fees for certain transactions, sparking curiosity and concern among users.
So, are UPI transactions still free? What are the new UPI payment charges applicable from 2024 onwards? Let’s break it down in simple terms.
UPI Payment Fees
| Feature | Details |
|---|---|
| UPI Fees for Bank Transfers | Free for normal person-to-person (P2P) transactions. |
| UPI Charges for Credit Cards | 0.5% to 1% on transactions using credit cards for bill payments (Google Pay, PhonePe, Paytm). |
| Prepaid Wallet UPI Transactions | 1.1% interchange fee on transactions above ₹2,000 (merchant transactions). |
| Government & RBI Stance | UPI will remain free for normal users, charges apply only to specific transactions. |
| Latest Updates (2024-2025) | NPCI and RBI have clarified that direct bank-to-bank UPI transfers remain free. |
| UPI for International Transactions | New charges apply to UPI transactions made outside India. |
| Upcoming Changes in UPI 2.0 | Advanced features like voice-based transactions and credit-linked UPI are coming soon. |
While UPI remains free for normal transactions, some specific payments via credit cards, wallets, and international transfers now attract charges. By understanding the UPI fee structure, users can avoid unnecessary fees and continue enjoying the benefits of digital transactions.
For updated details, check the official NPCI website or your respective UPI app’s fee structure.
Understanding UPI Payment Fees in 2024
1. Are UPI Payments Free?
For most transactions, UPI remains free. However, some charges are introduced for specific cases like credit card usage and wallet-based transactions.
Free Transactions:
- Bank-to-bank transfers via UPI (sending/receiving money).
- Merchant payments using bank UPI accounts (if no third-party wallet is involved).
- Bill payments from a bank account via UPI apps.
2. Where Are UPI Charges Applicable?
Let’s look at scenarios where fees apply:
a) UPI Payments via Credit Cards
Many users have started paying bills via credit cards linked to UPI apps. Platforms like Google Pay, PhonePe, and Paytm now charge:
- 0.5% to 1% per transaction for credit card-based bill payments.
- Charges apply to electricity bills, mobile recharges, insurance premiums, etc.
For example:
- If you pay a ₹10,000 electricity bill via a credit card on Google Pay, you may be charged ₹50 to ₹100 extra.
b) UPI Transactions via Prepaid Wallets (PPIs)
Since April 1, 2023, the National Payments Corporation of India (NPCI) introduced a 1.1% interchange fee for UPI transactions done via prepaid wallets exceeding ₹2,000.
For example:
- Paying a ₹5,000 bill using a Paytm wallet linked to UPI will attract an additional 1.1% charge (₹55).
Note: This charge is applicable only on merchant payments and not on regular UPI transactions between friends and family.
c) UPI for International Transactions
With UPI expanding internationally, cross-border transactions may attract additional fees depending on the bank and country. Some platforms charge a conversion fee when using UPI for payments outside India.
3. Will Banks Start Charging for UPI Transactions?
As per the Reserve Bank of India (RBI) and NPCI, bank-to-bank UPI transactions remain free for users. There are no direct fees for sending money from your bank account using UPI.
However, if banks introduce premium services (like instant refunds, express payments), they may charge convenience fees.
4. Detailed Breakdown of UPI Payment Charges
| Type of Transaction | Charges Applicable |
| Bank-to-Bank UPI Transfer | Free |
| Bill Payments via Credit Card on UPI Apps | 0.5% to 1% |
| Merchant Payments via Prepaid Wallets (Above ₹2,000) | 1.1% |
| UPI to Wallet Transfers | Depends on the wallet provider |
| Merchant Transactions via Business UPI | May attract charges depending on the provider |
| UPI International Transactions | May have conversion and transaction fees |
New Features in UPI 2.0
The NPCI is introducing UPI 2.0, which includes:
- Voice-activated UPI transactions (for easier access for elderly and visually impaired users).
- UPI Credit Link (allowing users to connect their UPI to credit lines and overdrafts).
- AutoPay Enhancements (for subscription-based payments and automated billing cycles).
- UPI Tap & Pay (NFC-enabled payments for offline transactions).
FAQs On UPI Payment Fees
1. Will I be charged for sending money via UPI?
No, sending money from one bank account to another via UPI remains free.
2. How can I avoid UPI charges?
Use bank-to-bank UPI transfers instead of credit card or wallet-based UPI payments.
3. What is the new 1.1% charge on UPI payments?
This is an interchange fee for merchant transactions using prepaid wallets (like Paytm, PhonePe) exceeding ₹2,000.
4. Will I be charged for paying electricity or mobile bills via UPI?
If you use a credit card to pay bills via UPI, you may be charged 0.5% to 1%. If you use a bank account, it remains free.
5. Are UPI transactions free for businesses?
Business UPI accounts may attract merchant discount rate (MDR) charges or wallet interchange fees.
6. Can I use UPI for international payments?
Yes, but conversion fees and transaction charges may apply depending on the platform and country.
