For a regular UPI payment made directly from a bank account in India, neither the customer nor the merchant pays a transaction fee. NPCI says bank-account-to-bank-account transactions remain free for both. The answer can differ in how payment costs are handled when you use a wallet, a linked credit product, or pay an international merchant, so check the transaction type before treating a charge as a general UPI fee.
Who pays the fee on an ordinary UPI payment?
For a domestic UPI payment funded directly from a bank account, neither side pays a UPI transaction fee: the customer is not charged, and the merchant does not pay one for that transaction. NPCI stated on 29 March 2023 that bank-account-to-bank-account UPI transactions “continue to remain free for Customers and Merchants.” NPCI’s UPI clarification gives the UPI-specific rule.
The legal backdrop is Section 10A of the Payment and Settlement Systems Act, 2007. It says a bank or system provider may not impose, directly or indirectly, a charge on a person making or receiving a payment using electronic modes prescribed under section 269SU of the Income-tax Act, 1961. The statute’s wording is specific; NPCI’s statement is the direct explanation for ordinary bank-account UPI payments.
What if I use a UPI wallet or another linked payment method?
“UPI charge” can describe different things: a fee shown to the customer, a deduction from a merchant’s settlement, or interchange between payment participants. They are not interchangeable.
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| Payment type | What the cited rule establishes | What to check |
|---|---|---|
| Bank account to bank account | NPCI says the transaction remains free for both customers and merchants. | Confirm the payment was funded directly from a bank account. |
| Interoperable PPI wallet payment to a merchant | NPCI says interchange applies only to PPI merchant transactions and that there is no charge to the customer. This is not a general surcharge on every UPI user or merchant. NPCI UPI FAQs | Check whether the funding source was a PPI wallet and review the payment provider’s terms for any specific disclosure. |
| RuPay credit card linked to UPI | An NPCI operating circular specifies nil merchant discount rate (MDR), including no interchange, PSP or app-provider charges, for small offline merchants on transactions up to ₹2,000. This limited rule does not establish the charges for every card-linked UPI transaction. NPCI RuPay credit-card-on-UPI circular | Check the merchant category, transaction amount, and the applicable card and app terms. |
NPCI’s P2P/P2M labels distinguish person-to-person transfers from person-to-merchant payments. That distinction matters because the PPI interchange rule cited above is for merchant transactions, not a blanket charge on all UPI transfers. NPCI’s UPI ecosystem definitions
Can an international UPI payment have a fee?
Domestic bank-account UPI guidance does not establish that a foreign-currency purchase has no conversion cost. For payments at international merchants, NPCI advises users to review the final amount in both currencies and any applicable exchange rates or fees. NPCI’s international-payment guidance
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How to check a fee shown on a UPI payment
- Open the receipt or payment screen. Note the amount, any separately displayed fee, and the recipient.
- Identify the funding source. Check whether the payment came from a bank account, a PPI wallet, or a RuPay credit card linked to UPI.
- Identify the recipient. Establish whether it was a person-to-person (P2P) transfer or a person-to-merchant (P2M) payment.
- Check the transaction category and amount. For a RuPay credit-card-on-UPI payment, do not assume the nil-MDR rule applies unless it is a small offline merchant transaction up to ₹2,000.
- For an international merchant, review both currencies. Check the conversion rate and any fee disclosed in the payment flow.
- Compare the receipt with the bank or app terms. The general rules do not establish the terms for every provider, merchant agreement, or cross-border conversion.
If the charge is disputed, share the specific receipt or payment screen with the relevant bank or app and ask what the line item represents—customer fee, merchant settlement deduction, or an ecosystem charge. NPCI’s general guidance cannot, by itself, identify the basis of a charge on an individual transaction.
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