As per the circular issued on March 24 this year, NPCI, has introduced up to 1.1% UPI interchange charges/fees on merchants which will be applicable from 1st April 2023.
That said, such UPI charges will only be applicable on UPI transactions via PPIs (prepaid payment instruments) such as their mobile wallets or gift cards – on an amount greater than Rs 2,000.
So what really happened?
NPCI or National Payments Corporation of India, is the organisation which regulates all the UPI transactions. Earlier UPI payments were possible only from one’s bank account to another bank account. This could be done via UPI ID, QR code or mobile number linked to bank account. Now, NPCI has announced that customers can make UPI transactions directly using any prepaid payment instruments like a PayTM wallet or an Amazon gift card.
With this announcement comes the announcement of UPI charges as well. Let’s understand this in depth.
Which UPI transactions will attract UPI charges?
If all the following points are present in your UPI payment, UPI charges will be applicable on merchant:
- If the customer is doing UPI paying to any merchant (e.g. shopkeeper, online e-commerce websites, etc.)
- If the payment is done from Prepaid Payment Instrument like gift cards and mobile wallets
- If the amount is greater than Rs 2,000
THESE UPI CHARGES WILL BE LEVIED ON MERCHANT ONLY.
You, as a customer initiating the payment, will not be paying any UPI charged under any circumstances.
NPCI took it to their Twitter handle to clarify all the UPI users that they will NOT be charges for making UPI transaction via mobile wallets or PPIs.
As per NPCI, “The interchange charges introduced are only applicable for the PPI merchant transactions and there is no charge to customers. and it is further clarified that there are no charges for the bank account to bank account based UPI payments (i.e. normal UPI payments).”
Which UPI transactions will not attract UPI charges?
The following UPI transactions will be free of any UPI charges whatsoever:
- UPI payments less than Rs 2,000 made to merchants via PPIs
- UPI payments of any amount made to merchant directly from bank account
- Transfer of funds to a friend/family (i.e. person to person transactions) – via PPIs or bank account
Who will pay the UPI charges?
NPCI has clearly stated that the newly introduced UPI charges on payments will only be levied on the merchants. These can be for payments towards groceries, supermarkets, telecom, post office, insurance premium and railways, etc.
Again, you (i.e. the customer) will not pay UPI charges for any UPI transaction.
How much UPI charge will be applicable?
The following is the list in which the types of UPI transactions and the charges on the same are stated:
- Fuel – 0.5%
- Telecom, post office, education and agriculture – 0.7%
- Supermarket – 0.9%

- Mutual fund, insurance policies and railway services – 1%
- Convenience store (kirane ki dukaan) – 1.1%
Will the merchant increase the price of goods/services now?
The chances of merchants increasing the price of goods or services to combat the extra UPI charges they’ll pay are very bleak. There may be two reasons for it:
1. The portion of PPI users making UPI payments is very less.
2. Those who make UPI payments via PPIs like mobile wallets usually do not go beyond Rs 2,000. There is a reason why a limit of Rs 2,000 has been set by NPCI.
The idea is to include PPIs in the digital ecosystem of the country, not make transactions expensive for customers.
UPI Transaction Charges 2023: Key Points
The following are the points that must be kept in mind regarding the newly announced UPI charges by NPCI:
- UPI charges to be applicable from 1st April 2023
- On UPI payments greater than Rs 2,000 made to merchants – from PPIs (e.g. mobile wallets & gift cards)
- Merchant will be paying this fee – not the customer
- No UPI charges on normal UPI payments (i.e. directly from bank account)
- No UP transaction charges on person-to-person transfers (paid to a friend or family etc.)
Visit the following links to know more about UPI:
UPI Charges 2023: FAQs
No. UPI transaction charges will be levied on merchants, not on customers.
Merchants will pay UPI charges when customers make UPI payment from a prepaid payment instrument like a mobile wallet and gift card. This will be applicable only if the amount is greater than Rs 2,000.
No. UPI charges are applicable only when the transaction is towards a merchant (greater than Rs 2,000).
Not directly. Charges for UPI payments will have to be paid by the merchant only, but in return, they may increase the price of goods/services – thus eventually passing on the burden to the customers.
UPI transaction charges will be up to 1.1%.