Well, in today’s digital world, making payments and transferring money has become easier than ever, thanks to the Unified Payments Interface, or UPI. UPI was introduced by the National Payments Corporation of India (NPCI) and it has revolutionized the way we handle our finances.

But as convenient as UPI is, it is essential to understand the associated transaction charges on UPI. In this guide, we will provide a clear overview of UPI transaction charges, including how they work, the different types of charges, and the rules and guidelines you need to be aware of.

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

A Prepaid Payment Instrument in UPI refers to a digital wallet that lets you store money and conduct real-time online transactions. These can include wallets such as PhonePe, Paytm, SODEXO vouchers, Amazon Pay, and Freecharge.

PPIs are a convenient way to make payments by scanning a UPI QR code, entering the receiver’s UPI ID, or using other payment options provided by these platforms. PPIs offer flexibility, security, and easy access to funds for various online purchases and services.

UPI Transaction Charges from 1st April 2023

UPI charges from 1st April 2023 have been updated. UPI transactions made through prepaid payment instruments, such as wallets, come with an interchange fee of up to 1.1% for certain merchant payments above Rs. 2,000. This fee is charged by the bank, the payment service provider of the payer to the bank or the payment service provider of the merchant who receives the payment.

However, normal customer transactions or UPI payments from one bank account to another are free.

UPI Transfer Limit Per Day

The UPI transaction limit for normal UPI transactions is Rs. 1 lakh per day as set by NPCI. However, for peer-to-merchant transactions (bill payments and merchant transactions), the limit is Rs. 5 lakhs. The maximum UPI daily transfer limit can vary from bank to bank, ranging between Rs. 25,000 and Rs. 1 lakh.

NPCI has also set a limit on the maximum number of UPI transactions per day. As per new NPCI regulations, a person can make up to 20 transactions in a day, post which they are required to wait for 24 hours to start transacting again. Note that the transaction limits can vary depending on different banks.

The National Payments Corporation India (NPCI) has also proposed to put a 30% volume cap on all UPI apps. This is to ensure that these UPI apps don’t form a monopoly on the UPI market. However, the deadline for limiting the volume cap for TPAPs (Third Party App Providers) has been extended by 2 years up to December 31, 2024, from an earlier deadline of Jan 1, 2023.

Surcharge or Interchange Fee on UPI Payments

UPI payment charges or interchange fees are UPI transaction fees imposed on merchants when customers process UPI transactions through PPIs. These UPI payment surcharges cover the expenses associated with processing, accepting, and authorizing transactions. Similar to the merchant discount rate for credit cards, the interchange fee increases revenue for payment service providers and banks.

The interchange fees are transaction charges that the merchant pays when a customer processes a transaction. As an example, if a customer makes a payment through UPI using a GPay QR code at a store, the merchant should pay the interchange fee to the payment service provider, i.e. Google Pay.

The interchange charge varies depending on the type of transaction. These categories are as follows –

  • Fuel: 0.5%

  • Post office, telecom, utilities, agriculture, and education: 0.7%

  • Supermarket: 0.9%

  • Insurance, mutual funds, and railway: 1.1%

The interchange fee plays a crucial role in the UPI ecosystem as it affects both merchants and consumers. Merchants need to account for these charges on UPI transactions as part of their operating costs, potentially impacting their profit margins.

However, not all UPI transactions have interchange fees. Some exceptions apply, depending on the bank or service provider. For instance, person-to-person transfers or government-related payments may be exempt from UPI fees.

Understanding the UPI payment interchange fee helps businesses and individuals comprehend the costs associated with using UPI for transactions. You can make informed decisions regarding your payment methods and budgeting by being aware of these exemptions and charges for UPI transactions.

What are the New UPI Guidelines from 1st April 2023?

The new UPI guidelines from 1st April 2023 are as follows:

  • An interchange fee of 1.1% will be levied on UPI transactions above Rs. 2,000 made through PPIs such as wallets, gift cards, etc.

  • The interchange fee will vary depending on the merchant type and the transaction’s nature. For example, the lowest interchange fee of 0.5% will apply to fuel payments, while the highest interchange fee of 1.1% will apply to mutual funds, insurance, and railway transactions.

  • The interchange fee will be charged only on PPI merchant transactions, not on peer-to-peer (P2P) and peer-to-merchant (P2M) transactions between bank accounts and PPIs.

  • The interchange fee will be borne by the merchant’s bank (the receiver of the payment) to the payer’s bank (the sender of the payment) to cover the costs of processing and authorizing the transactions.

  • These changes were suggested on 1st April 2023 and will be reviewed by 30th September 2023.

  • The interchange fee is set in accordance with the guidelines put forth by the World Bank and the Committee on Payments and Market Infrastructures.

Will Customers Pay the Interchange Fee on UPI Payments?

You as a customer will not have to pay the interchange fees for UPI payments made through PPIs for P2P and P2M transactions. P2P transactions involve transferring an amount between two individuals or individual accounts through UPI, while P2M refers to making payments through UPI to merchants for purchases.

The interchange charges only apply to PPI merchant transactions where the UPI is linked to a mobile wallet or payment service provider. You can make UPI payments without incurring any transaction charges when transferring funds to family, friends, or other individuals, and when making payments directly into a merchant’s bank account.

Who Will Pay the Interchange Fees?

In the case of UPI transactions, these fees are typically paid by merchants. For example, when you make a payment using UPI at a store or online, the applicable interchange fee will be levied on the merchant side. Fortunately, small merchants are exempt from this fee. Medium-sized merchants, on the other hand, will only be required to pay interchange fees for transactions exceeding Rs. 2,000. For high-value transactions, the decision to absorb the increased cost or pass it on to the customers rests with the merchants. This provides them flexibility in managing their costs.

The NPCI has introduced a wallet-loading service charge for PPI issuers. They are now required to pay 15 basis points (0.15%) as a service charge to the remitter banks when recharging wallets with amounts exceeding Rs. 2,000.

For instance, if you top up your Amazon wallet with more than Rs. 2,000, Amazon will pay a wallet-loading service charge of 0.15% to your bank. That means you, as a user, won’t face any additional fees when recharging your wallet for conducting UPI transactions. The burden of this fee falls on the PPI issuers, not the customers, making digital transactions more convenient and cost-effective.

The interchange fee is typically distributed between banks, payment service providers, and merchants within the payment ecosystem. The payer bank collects this fee from the merchant’s account to process the transaction. It helps cover operational costs and ensures a smooth flow of funds between different participants in the UPI system.

UPI transaction limit for different UPI Apps

Different UPI apps have varying transaction limits. Google Pay (GPay), PayTM, and Amazon Pay UPI have set a limit of Rs. 1 lakh per day.

GPay also halts the daily transaction limit if someone sends money requests of Rs. 2,000 and above. For example, suppose you use Google Pay and have already conducted transactions totaling Rs. 80,000 in a day. Someone sends you a money request for Rs. 2,000 or more. This may put a temporary halt on your daily limit. You would need to approve or decline the request. If approved, the remaining amount you can send for that day will be reduced accordingly to stay within the limit of Rs. 1 lakh.

Additionally, Amazon Pay UPI allows new customers to carry out transactions up to Rs. 5,000 only for the first 24 hours. Keep in mind though, that these limits may vary among banks and payment service providers.

UPI Transaction Limits for Top Banks in India

The basic UPI limit per day and number of transaction limits set by NPCI are common, that is, Rs 1,00,000 in a day or up to a maximum of 20 transactions. However, banks can have individual limits. Here are the details of some of the most common banks –

Bank Name

UPI Daily Limit

UPI Transaction Limit


Rs. 1,00,000

Rs. 1,00,000


Rs. 50,000

Rs. 25,000


Rs. 1,00,000

Rs. 25,000

Allahabad Bank

Rs. 1,00,000

Rs. 50,000

Bank of India

Rs. 1,00,000

Rs. 10,000

Indian Overseas Bank

Rs. 1,00,000

Rs. 50,000


However, these limits are subject to change and may differ based on the type of UPI transaction, such as peer-to-peer or merchant payments. It is important to check with your bank or payment service provider for the specific UPI transfer limit applicable.

Frequently Asked Questions (FAQs)

1. How can I find my bank’s UPI transaction charges?

Usually, for normal transactions, i.e. bank account to bank account-based UPI payments, there are no charges per NPCI. For PPI transactions, i.e. payments made through wallets or other prepaid instruments, there are interchange fees of up to 1.1% on transactions above Rs. 2,000 that are borne by merchants.

2. How can I avoid or minimize UPI transaction charges?

As a merchant, you can avoid or minimize UPI transaction or payment gateway charges by following these tips:

  • Use bank account-based UPI payments instead of wallet-based ones. There are no charges for bank-to-bank UPI payments.

  • If you use wallet-based UPI payment links, try to keep the transaction value below Rs. 2,000. The interchange fee of 1.1% is only applicable for transactions above Rs. 2,000.

  • Negotiate with your UPI payment gateway or payment service provider to reduce the interchange fee or pass it on to the customer.

3. Are there any exemptions from UPI transaction charges?

Yes. For normal bank-to-bank UPI transactions, there are no charges as per NPCI. Besides that, transactions below Rs. 2,000 do not attract interchange fees for payments made through wallets or other prepaid instruments.

4. Can merchants pass on UPI transaction charges to customers?

Merchants have the option to pass on UPI transfer charges to customers as per the guidelines issued by the Reserve Bank of India (RBI).

5. Are UPI transactions taxable?

No, UPI transactions are not taxable. However, other applicable taxes like the Goods and Services Tax (GST) may be levied on goods or services purchased through UPI transactions.

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