Document

UPI Transaction Charges: Limit Per Day, Guidelines, Applicability, Rules And Everything You Need To Know

By Adnan Ali

|

Updated on: Jul 3rd, 2024

|

3 min read

The National Payments Corporation of India (NPCI) developed the Unified Payment Interface (UPI). UPI allows real-time transfers between personnel accounts, banks and merchant accounts through mobile devices. It also facilitates instant bank-to-bank payments, making online payments convenient and easy. It is the most preferred payment system in India.

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

The Prepaid Payment Instrument (PPI) in UPI means digital wallets that allow a person to store money and make real-time payments online. Wallets, smart cards, preloaded gift cards, vouchers and magnetised chips also come under PPIs.

Payments through PPI are made when a transaction is done via a wallet, like a PhonePe wallet, by scanning a UPI QR code. A few more examples of wallets are the Paytm wallet, SODEXO vouchers, Amazon Pay, Freecharge wallet, etc. 

UPI transfer limit per day

The UPI transaction limit per day is Rs.1 lakh as per NPCI. However, the limit is Rs.5 lakh for payments to educational institutions and healthcare. The maximum UPI daily transfer limit can change from bank to bank between Rs.25,000 to Rs.1 lakh. A few banks have also set UPI transfer limits per week or per month instead of a day. 

Surcharge/Interchange fee on UPI payment

When UPI transactions are made through PPIs, such as wallets, interchange fees will be imposed. The interchange fee is associated with card payments and is charged to cover the processing, accepting and authorising transactions costs. This fee is similar to the merchant discount rate applicable to credit cards. It increases revenue for payment service providers and banks.

In UPI transactions, the interchange fees are transaction fees the merchant must pay when a customer processes a transaction. Thus, when a customer makes a payment through UPI using a PhonePe QR code at a store, the merchant should pay the interchange fee to the payment service provider, i.e. PhonePe. 

The interchange fee is applicable in the range of 0.5-1.1% on different services. An interchange fee of 0.5% is applicable on fuel payments, 0.7% for the post office, telecom, utilities, agriculture and education, 0.9% for supermarket payments, and 1% for insurance, mutual fund, government and railways.

UPI new guidelines

As per the new rule, an interchange fee of up to 1.1% on UPI transactions above Rs.2,000 made through PPIs, applicable from 2024. 

Will customers have to pay the interchange fee on UPI payments made via wallets?

Customers will not have to pay the interchange fees for UPI payments made through PPIs for Peer to Peer (P2P) and Peer to Merchant (P2M) transactions. P2P transactions mean transferring an amount between two individuals or individual accounts through UPI. P2M is where customers make payments through UPI to merchants for purchases.

One bank charges the interchange fee to another bank for processing a transaction. In the case of UPI transactions, the merchant bank (the business or person receiving payment) pays the interchange fee to the payer bank (the person making the payment).

Thus, the interchange charges only apply to PPI merchant transactions, and there is no charge to customers. Customers or users do not have to pay interchange fees for the UPI payments when the UPI is linked to a bank. Merchants will pay the interchange fee when the UPI is linked to the wallet. The interchange fee will also not affect customers who make UPI payments to family, friends, other individuals or the merchant’s bank account. 

How much UPI transactions will be free?

The new guidelines on UPI transaction fees of up to 1.1% are applicable to merchants accepting payments above Rs.2,000 using PPIs, such as mobile wallets. Individuals making personal transactions using UPI are not charged any fees. Thus, UPI payments of any amount for personal transactions are free.

Are UPI payments free or chargeable?

There is no extra charge for making payments via UPI. Thus, UPI payments by individuals for personal transactions are free. However, digital wallet transactions above Rs.2,000 will be charged. Users do not have to pay this charge, and the merchants have to pay the interchange fee.

Who will pay the interchange fees?

The merchants pay the interchange fees to the card issuers or wallets. The interchange fee applies to small shopkeepers; thus, it will not impact them. The medium category shopkeepers will only have to pay the interchange fees for transactions above Rs.2,000. However, for high-value transactions, the payment of interchange fees will depend on whether the merchants want to absorb the higher costs or decide to pass the higher cost to customers.

Thus, the NPCI has asked the PPI issuers to pay 15 basis points as wallet-loading service charges to the remitter banks for recharging wallets with over Rs.2,000. 

For example, if you recharge your PhonePe wallet with more than Rs.2,000, PhonePe will pay a wallet-loading service charge of 0.15% to your bank. 

Thus, you will not have to pay any additional fee for recharging your wallet to make UPI transactions.

Also read about:
1. How To Check Aadhar PAN Card Link Status Online?
2. What is UPI Lite: Transaction Limit Per Day, Supported Banks, How to Transfer Money?
3. How To Do UPI Payment Without Internet?
4. What is UPI ID? How to Create and Change UPI ID?
5. How to Reverse Wrong UPI Transactions?

Can't get yourself started on taxes?
Get a Cleartax expert to handle all your tax filing start-to-finish
About the Author

I am a curious person, and Finance is at the top of my list of interests. With more than 5 years of experience in fintech, I am an expert in lending, investment and personal finance. I believe the Devil lies in details, so I dig a lot before writing anything and armed my writing pieces with figures and facts. Read more

rhs_card

Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use

ISO

ISO 27001

Data Center

SSL

SSL Certified Site

128-bit encryption