Reconcile UPI in two stages: match successful customer payments to your acquiring bank or payment provider’s settlement report, then match each reported settlement to the credit in your business bank account. Explain any difference with documented refunds, reversals, fees, taxes or adjustments—not an assumed UPI fee rate. Keep unmatched items on an exception list until your provider resolves them.
Why UPI payments and bank credits do not always match
A customer’s successful UPI payment, the amount shown in a settlement report and the amount credited to your bank account are different reconciliation checkpoints. A bank deposit may cover a settlement batch rather than a single payment, and refunds, reversals or documented adjustments may affect what is ultimately credited. NPCI describes report-based settlement reconciliation between participating banks and the handling of exceptional transactions; the merchant-facing reports and fields depend on your provider. NPCI’s UPI settlement process
Use the provider’s settlement report as the bridge between payment records and bank credits. Do not treat an unexplained difference as a fee simply because the bank credit is lower than the customer-payment total.
Records to gather before reconciling
- Transaction-level UPI report from your acquiring bank or payment provider.
- Settlement report for the same period, including batch or settlement references.
- Business bank statement showing the actual credits.
- Provider fee schedule or merchant agreement, plus itemized fee and tax documents.
- Records for refunds, reversals, disputes and other adjustments.
Keep original exports unchanged and note when and where you downloaded them. NPCI’s member-side process refers to daily settlement reports, but portal names, report availability and merchant procedures vary. Its older operational circular advises member banks to retain settlement and adjustment records; it is not a current merchant retention deadline. NPCI’s 2017 circular on debit reversals and deemed approval
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Step-by-step UPI reconciliation
1. Set the period and cut-off
Reconcile daily if transaction volume makes that practical; otherwise choose a regular, documented cadence. Use the cut-off and timezone specified by your provider. A calendar day or bank business day may not align with the provider’s settlement batch, so capture the batch reference and settlement date rather than relying on the date alone.
2. Match payments to the settlement report
Use the strongest shared identifiers available, such as UPI transaction ID or RRN, provider order or payment ID, settlement reference, amount, status and timestamp. Match successful payments to the relevant batch. Amount alone is weak evidence when identical payments can occur. Set failed, pending, duplicate, refunded, reversed and disputed items aside with their statuses instead of counting them as ordinary settled sales.
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3. Bridge the settlement report to the bank statement
For each batch or period, total the matched successful payment value. Then account separately for supported refunds and reversals, provider-documented charges and taxes, and other documented adjustments. Compare the resulting expected net amount with the bank credit or credits. Preserve a clear link from each bank deposit back to its settlement report and the transactions in that batch.
This is a reconciliation method, not a prescribed accounting entry. The records establish what happened; the correct ledger treatment depends on your accounting policy and business facts.
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4. Verify every fee against your agreement
Check the signed merchant agreement, fee schedule, settlement statement and tax invoice. A processing charge should have an itemized provider record and contractual basis. Keep it distinct from refunds, settlement timing differences, adjustment entries or a bank-side posting issue. Ask the provider to explain any fee line you cannot match to the agreement.
There is no universal UPI merchant fee percentage established by the official sources cited here. The RBI directive on unbundling MDR applies to debit, credit and prepaid cards; it should not be presented as a general UPI tariff. RBI: Merchant Discount Rates (MDR) structure – unbundling of charges
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5. Track and resolve exceptions
Keep an exception register so a mismatch remains visible until it is resolved. Useful fields include transaction reference, date, amount, status, expected settlement, provider case or reference number, responsible person and resolution. For UPI transaction status or merchant grievances, contact your acquiring bank; follow the bank’s defined process for refunds. NPCI directs users and merchants to the acquiring bank for these issues. NPCI UPI FAQs
File original reports, correspondence, corrected exports and supporting ledger records together. Ask your provider and accountant what retention requirements apply to your business.
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NPCI settlement-cycle update effective December 15, 2025
NPCI Circular 222A, dated October 29, 2025, moved adjustment reporting for cycles 1–10 into dedicated cycles 11 (DC1) and 12 (DC2), effective December 15, 2025. From that date, adjustment reports for cycles 1–10 would stop under the circular. This is an operational change for participating members and reporting infrastructure, not a reason to assume a particular merchant portal layout. Use the current reports provided by your acquiring bank or payment provider. NPCI Circular 222A addendum
Choosing a reconciliation workflow or tool
Whether you reconcile in a spreadsheet, in your ledger or with accounting software, assess whether the process can:
- Import transaction-level provider reports and retain useful identifiers.
- Match settlement batches to one or more bank credits.
- Keep fees, taxes, refunds, reversals and adjustments in separate categories.
- Maintain an exception queue and an audit trail of changes and resolutions.
- Export records, control access and meet your retention needs.
- Work with your existing accounting ledger at a cost that suits the business.
A manual ledger can help record exceptions, but it does not replace the provider’s transaction exports, settlement reports or bank reconciliation.
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