UPI Payment (Transactions) Charges Updates

News published on April 1, 2023, any UPI transaction above Rs 2,000 through prepaid payment instruments (PPI), such as online wallets or gift cards, will incur an interchange fee of up to 1.1%. However, customers will not be charged for UPI payments as the fee only applies to PPI merchant transactions.

The National Payments Corporation of India (NPCI) issued a circular stating that regular UPI payments will remain free of charge. This change will benefit consumers by allowing them to use any bank account, RuPay Credit card, or prepaid wallet on UPI-enabled apps. It will also enhance the customer experience, as merchants can accept wallet payments regardless of the wallet used by the customer.

The National Payments Corporation of India (NPCI) issued a circular stating that regular UPI payments will remain free of charge.

NPCI News Link

Additionally, the increased charges on high-value UPI transactions are expected to encourage merchants to adopt other payment modes, such as credit and debit cards, diversifying the payments ecosystem and reducing dependence on UPI for all transactions. The decision is expected to bring in much-needed revenue for payment service providers struggling to maintain profitability due to low transaction fees on UPI transactions.

The aim is to help banks and payment service providers generate more revenue as they face high costs with UPI transactions. This new interchange fee will go into effect on April 1, 2023, and will be reviewed by September 30, 2023.

Important points to keep in mind in UPI payment/transaction charges 

  • If the UPI payment is made through a PPI (such as Google pay, Paytm, or PhonePe wallet), and the value of the transaction is Rs 2,000 or more, a 1.1% fee will be charged.
  • Transactions made with a PPI wallet of less than Rs 2,000 will not be charged this fee.
  • The merchant will be charged the fee, but they may or may not pass it on to consumers.
  • Normal UPI transactions (from a bank account to a bank account) will not be charged any fees.

This new fee only applies to merchants who accept payments over Rs 2,000 using PPIs. Individual users making personal transactions using UPI will not be charged any additional fees. The NPCI hopes that incentivizing PPI providers to promote UPI transactions for higher amounts will reduce the overall cost of payment systems in India.

The NPCI states that this proposed interchange fee aligns with the recommendations of the Committee on Payments and Market Infrastructures and the World Bank, which suggest an interchange fee of up to 1.15% for UPI transactions.


What is PPI and Its full form?

Prepaid Payment Instruments (PPIs) are digital payment methods that allow users to store money and make payments without needing physical cash or cards. They include online wallets, smart cards, paper vouchers, and more. According to recent regulatory guidelines, PPIs have been permitted to be part of the interoperable UPI ecosystem by the NPCI.

What is ppi in UPI?

PPI in UPI stands for Prepaid Payment Instruments. These digital payment methods, such as wallets or prepaid cards, are linked to UPI and can be used to transact on the platform.

What are PPI merchant Transactions?

PPI merchant transaction refers to a digital payment made through a Prepaid Payment Instrument (PPI) at a merchant’s establishment. The transaction is processed through the PPI issuer’s platform and is linked to the merchant’s UPI ID.

Are there any charges on UPI Transactions?

There are no charges for customers on the bank account to bank account-based UPI payments (normal UPI payments). However, interchange charges introduced are applicable only for PPI merchant transactions, and there is no charge to customers, as stated by the National Payments Corporation of India (NPCI).


The author writes about fintech, banking, and future of SAAS services. He works as an SEO analyst at Easebuzz, so if you're looking for an account that tracks India's fintech scene, you should check out his Easebuzz blog.