Introduction: What’s Changing with UPI Payments?
UPI (Unified Payments Interface) has been a game-changer in India’s digital payment landscape, allowing seamless, real-time transactions at no cost. However, recent policy changes have sparked concerns as some UPI transactions will now incur convenience fees.
While bank-to-bank UPI transfers remain free, certain transactions, especially those involving credit cards and third-party payments, may now attract a small processing fee. So, does this mean you’ll have to pay for every UPI transaction? Let’s break it down in simple terms so you know what to expect.
UPI Payments
| Aspect | Details |
|---|---|
| Who Will Be Affected? | Users making UPI payments via credit cards or certain platforms like Google Pay, PhonePe, and Paytm. |
| What is Free? | Direct bank-to-bank UPI transactions (e.g., sending money to friends, merchants, or family). |
| New Charges Introduced? | Convenience fees of 0.5% to 1% on select transactions, mostly credit card-based payments. |
| Who Introduced These Fees? | Digital payment platforms like Google Pay, PhonePe, Paytm, following NPCI’s (National Payments Corporation of India) guidelines. |
| Effective Date | Already in effect (as of 2024). |
| What Can You Do? | Avoid fees by using UPI directly linked to your bank account instead of cards. |
| Official Source | NPCI Official Website |
While UPI remains free for most users, new convenience fees on credit card payments may affect how people transact. The best way to avoid these charges is to use bank-linked UPI transfers instead of credit cards or wallets.
Digital payments are evolving, and staying informed about such changes can help you save money and make better financial decisions. Always check for hidden fees before making payments!
Understanding UPI Payments Charges: What’s Free and What’s Not?
Many people are confused about the recent UPI charges and how they apply to daily transactions. Let’s clarify what remains free and where you might have to pay.
UPI Transactions That Remain Free
The good news is most UPI payments still don’t have any fees. This includes:
- Peer-to-Peer (P2P) Transfers – Sending money to friends or family.
- Bank-to-Bank UPI Transfers – Paying merchants via direct bank account UPI IDs.
- Bill Payments Using Bank Accounts – Paying electricity, water, and other bills from a linked bank account.
UPI Transactions That May Now Have Charges
Some transactions will attract a small fee, mainly when using credit cards for payments. This includes:
- Credit Card-Based UPI Transactions – Paying utility bills or merchants via UPI-linked credit cards (0.5% to 1% fee).
- Wallet Top-Ups via UPI – Adding money to Paytm, Google Pay, or PhonePe wallets via UPI (fees vary by platform).
- Merchant Transactions via Third-Party Apps – Business-related payments using UPI via third-party providers may have a processing fee.
Example: If you pay ₹10,000 using your credit card through Google Pay for electricity, you may be charged ₹50 to ₹100 extra as a convenience fee.
Why Are UPI Payments Fees Being Introduced?
UPI was initially free, but as its usage has grown exponentially, the infrastructure cost for banks and payment providers has increased. Here are some key reasons behind the new charges:
Payment Infrastructure Costs
Every UPI transaction requires banks, NPCI, and payment apps to process data, maintain servers, and ensure security. As usage has surged, these costs have risen significantly.
Encouraging Direct Bank Transfers
By charging fees on credit card-based UPI payments, banks and regulators are encouraging people to use bank account UPI transactions, which are more cost-effective.
Third-Party Payment Provider Costs
Platforms like Google Pay, Paytm, and PhonePe have to pay banks to process transactions. By introducing convenience fees, they aim to recover operational costs.
Regulation Compliance
The Reserve Bank of India (RBI) and NPCI have been working to balance the ecosystem by ensuring banks and fintech companies sustain their business models.
UPI Payments: How to Avoid Paying Extra Fees on UPI Transactions?
If you don’t want to pay extra for your UPI transactions, here are some simple steps to follow:
Use Your Bank Account for UPI Payments
Instead of linking a credit card, use your bank account UPI ID to send money or make payments. This will help you avoid fees completely.
Check Payment Platforms for Fee Details
Before confirming a payment, look for any convenience fees displayed by Google Pay, Paytm, or PhonePe. Avoid credit card-based payments if fees apply.
Use Net Banking or Debit Cards for Big Transactions
If you need to make large payments, using net banking or direct debit card transactions can sometimes be cheaper than using UPI with a credit card.
Pay Bills Directly via UPI-Enabled Apps
To avoid extra charges on bill payments, use banking apps like SBI YONO, ICICI iMobile, or HDFC PayZapp, which often don’t charge extra for transactions.
UPI Payments (FAQs)
Will all UPI transactions have charges?
No, bank-to-bank UPI transfers remain free. Only credit card-based UPI payments and certain merchant transactions may have small convenience fees.
How much is the UPI fee for credit card payments?
It varies between 0.5% to 1% based on the payment provider and merchant type.
Are digital wallets like Paytm and Google Pay affected?
Yes, adding money to Paytm Wallet, Google Pay Wallet, or PhonePe Wallet via UPI may have additional fees.
Can I avoid UPI fees?
Yes, you can avoid fees by using direct bank account UPI payments instead of credit cards or wallets.
Where can I check official UPI fee rules?
You can refer to the NPCI Official Website: www.npci.org.in for the latest updates.
