The Unified Payments Interface (UPI) has revolutionized the way we make payments in India. In this article, we will discuss everything you need to know about UPI charges, including their types, how they are calculated, and ways to avoid them.
It has made transactions faster, easier, and more convenient. However, with this convenience comes a cost. UPI transactions come with various charges, and it is essential to understand them to avoid any surprises.
Types of UPI Charges
There are various types of charges associated with UPI transactions. Let’s take a look at them one by one.
- Transaction Charges: UPI transaction charges are the fees charged by banks for processing UPI transactions. Currently, most banks do not charge any transaction fees for UPI transactions. However, some banks may charge a small fee for transactions beyond a certain limit.
- Merchant Discount Rate (MDR): The Merchant Discount Rate (MDR) is the fee charged by banks to merchants for accepting payments through UPI. MDR is usually a percentage of the transaction amount and varies between banks. Generally, it ranges from 0.25% to 0.65% for UPI transactions.
- UPI Charge for Cash Withdrawal: Some banks may charge a fee for cash withdrawals using UPI. This fee is usually a flat amount per transaction, and the exact amount varies between banks.
- UPI Charge for Account Linking: Some banks may charge a fee for linking UPI to a bank account. This fee is usually a one-time charge and is levied to cover the cost of account verification.
How are UPI Charges Calculated?
The calculation of UPI charges varies depending on the type of charge. Let’s take a look at how each charge is calculated.
- Transaction Charges: As mentioned earlier, most banks do not charge any transaction fees for UPI transactions. However, some banks may charge a small fee for transactions beyond a certain limit. For example, Axis Bank charges Rs. 2.5 plus GST for transactions beyond 20 in a month.
- Merchant Discount Rate (MDR): MDR is usually a percentage of the transaction amount and varies between banks. For example, if the MDR is 0.50% and you make a transaction of Rs. 1000, the MDR will be Rs. 5.
- UPI Charge for Cash Withdrawal: The fee for cash withdrawals using UPI is usually a flat amount per transaction. For example, ICICI Bank charges Rs. 2.50 plus GST for cash withdrawals up to Rs. 25,000.
- UPI Charge for Account Linking: The fee for linking UPI to a bank account is usually a one-time charge. For example, HDFC Bank charges Rs. 150 plus GST for UPI account linking.
Ways to Avoid UPI Charges
Now that we know the types and calculation of UPI charges, let’s take a look at some ways to avoid them.
- Use UPI for Transactions Within the Limit: To avoid transaction charges, make sure to use UPI only for transactions within the limit set by your bank.
- Choose Merchants That Offer Lower MDR: If you frequently make payments to merchants through UPI, choose merchants that offer lower MDR. Some merchants may offer discounts on MDR for UPI transactions, so keep an eye out for such offers.
- Use UPI for Cashless Transactions: To avoid cash withdrawal charges, use UPI for cashless transactions instead of cash withdrawals.
- Link UPI to a Bank Account With No Linking Charges: To avoid account linking charges, link UPI to a bank account that does not charge any linking fees. Most banks offer UPI account linking for free, so make sure to choose a bank that does not levy any charges for linking UPI to a bank account.
- Choose UPI Apps That Offer Rewards: Some UPI apps offer rewards and cashbacks for using their services. For example, Paytm offers cashback on UPI transactions, which can help offset the charges associated with UPI transactions.
- Opt for UPI Transactions During Bank Holidays: Some banks waive off transaction charges on UPI transactions during bank holidays. Therefore, it is advisable to check with your bank regarding such offers and make UPI transactions during bank holidays to avoid transaction charges.
Features of UPI Fund Transfer
UPI (Unified Payments Interface) is a digital payments platform launched by the National Payments Corporation of India (NPCI) in 2016. UPI has become one of the most popular digital payment methods in India, with more than 3 billion transactions processed in February 2023. UPI offers a range of features that make it a convenient and easy-to-use platform for fund transfers. We will discuss the features of UPI fund transfer.
Instant Fund Transfer
One of the key features of UPI is that it enables instant fund transfers between bank accounts. Users can send and receive money in real-time, which means that the funds are transferred immediately and are available for use as soon as the transaction is completed.
24/7 Availability
UPI is available 24/7, which means that users can transfer funds at any time of the day or night, including weekends and holidays. This makes UPI a highly convenient option for fund transfers.
Multiple Bank Accounts
UPI allows users to link multiple bank accounts to a single UPI ID. This means that users can easily switch between bank accounts while making transactions without the need to enter the account details every time.
Secure Transactions
UPI uses a two-factor authentication process to ensure the security of transactions. The first factor is the UPI PIN, which is a four or six-digit code that is known only to the user. The second factor is the mobile number, which is used to authenticate the transaction.
Easy-to-Use Interface
UPI has a simple and user-friendly interface that makes it easy for users to make fund transfers. Users can simply enter the UPI ID or mobile number of the recipient, enter the amount to be transferred, and confirm the transaction using their UPI PIN.
Payment Requests
UPI also allows users to request payments from their contacts. This is a convenient feature for users who need to collect payments from their friends, family, or customers. Users can simply send a payment request to the contact, and the contact can approve the request and make the payment using UPI.
Bill Payments
UPI also enables users to make bill payments for a range of services, including electricity bills, water bills, gas bills, and mobile recharge. Users can simply select the bill payment option, enter the bill details, and make the payment using UPI.
Transaction History
UPI also provides users with a transaction history that shows all their past transactions. This is a useful feature for users who need to keep track of their payments and transactions.
QR Code Payments
UPI also supports QR code payments, which allows users to make payments by scanning a QR code. This is a convenient option for merchants who need to receive payments from their customers.
UPI is a highly convenient and easy-to-use platform for fund transfers. Its instant transfer feature, 24/7 availability, multiple bank account linking, secure transactions, easy-to-use interface, payment requests, bill payments, transaction history, and QR code payments make it a popular payment method in India.
Advantages of UPI Transactions
UPI (Unified Payments Interface) has revolutionized the way people in India make payments and transfer funds. Since its launch in 2016, UPI has gained immense popularity and is now one of the most widely used payment methods in India. We will discuss the advantages of UPI transactions.
Instant Fund Transfer
One of the primary advantages of UPI transactions is that they enable instant fund transfers between bank accounts.
UPI allows users to transfer funds in real-time, which means that the funds are available for use immediately after the transaction is completed. This is especially useful for emergency fund transfers.
Easy-to-Use Interface
UPI has a simple and user-friendly interface that makes it easy for users to make transactions. Users can simply enter the UPI ID or mobile number of the recipient, enter the amount to be transferred, and confirm the transaction using their UPI PIN.
This makes UPI a highly convenient payment option, especially for those who are not familiar with online payments.
Multiple Bank Account Linking
UPI allows users to link multiple bank accounts to a single UPI ID. This means that users can easily switch between bank accounts while making transactions without the need to enter the account details every time. This is especially useful for users who have multiple bank accounts.
24/7 Availability
UPI is available 24/7, which means that users can transfer funds at any time of the day or night, including weekends and holidays. This makes UPI a highly convenient option for fund transfers, especially for users who have urgent payment requirements.
Secure Transactions
UPI uses a two-factor authentication process to ensure the security of transactions. The first factor is the UPI PIN, which is a four or six-digit code that is known only to the user.
The second factor is the mobile number, which is used to authenticate the transaction. This makes UPI a highly secure payment option, and users can be assured that their transactions are safe and secure.
Payment Requests
UPI also allows users to request payments from their contacts. This is a convenient feature for users who need to collect payments from their friends, family, or customers.
Users can simply send a payment request to the contact, and the contact can approve the request and make the payment using UPI.
Bill Payments
UPI also enables users to make bill payments for a range of services, including electricity bills, water bills, gas bills, and mobile recharge.
Users can simply select the bill payment option, enter the bill details, and make the payment using UPI. This eliminates the need for users to stand in long queues to pay their bills.
QR Code Payments
UPI also supports QR code payments, which allows users to make payments by scanning a QR code. This is a convenient option for merchants who need to receive payments from their customers. Users can simply scan the QR code using their UPI app and make the payment.
In conclusion, UPI transactions offer several advantages over traditional payment methods. Its instant fund transfer feature, easy-to-use interface, multiple bank account linking, 24/7 availability, secure transactions, payment requests, bill payments, and QR code payments make it a highly convenient and popular payment method in India.
Various Applications that Supports UPI Payments
UPI (Unified Payments Interface) has become an increasingly popular mode of payment in India due to its convenience and ease of use.
The interface has been integrated into several apps and platforms, making it accessible to millions of users across the country. We will discuss various applications that support UPI payments.
BHIM (Bharat Interface for Money)
BHIM is a UPI-based app developed by the National Payments Corporation of India (NPCI) that enables users to make digital payments directly from their bank accounts.
The app allows users to send and receive money, check account balance, and make bill payments. It also supports multiple languages and is available on both Android and iOS platforms.
Paytm
Paytm is a mobile wallet app that has been integrated with UPI, enabling users to link their bank accounts and make payments using UPI.
The app also allows users to make bill payments, book movie tickets, and recharge their mobile phones. Paytm has a large user base in India, and its integration with UPI has further increased its popularity.
Google Pay
Google Pay is a UPI-based app developed by Google that allows users to send and receive money, pay bills, and recharge mobile phones. The app also supports QR code payments, enabling users to make payments by scanning a QR code.
Google Pay is available on both Android and iOS platforms and has gained immense popularity in India due to its ease of use and reliability.
PhonePe
PhonePe is a UPI-based app that allows users to make payments directly from their bank accounts. The app enables users to send and receive money, pay bills, and recharge mobile phones.
PhonePe also supports QR code payments, and users can make payments by scanning a QR code. The app is available on both Android and iOS platforms and has gained popularity in India due to its user-friendly interface and fast transaction processing.
Amazon Pay
Amazon Pay is a digital wallet developed by Amazon that has been integrated with UPI, enabling users to make payments using UPI.
The app allows users to pay bills, recharge mobile phones, and make online purchases. Amazon Pay is available on both Android and iOS platforms and is widely used by customers who shop on Amazon.
WhatsApp, the popular messaging app, has also integrated with UPI, enabling users to send and receive money directly from their bank accounts.
The app allows users to send money to their contacts by simply typing in the amount and verifying the transaction using UPI PIN.
WhatsApp’s integration with UPI has made it a highly convenient option for users who want to make payments directly from their messaging app.
Here is a table listing some popular UPI apps and banking apps in India:
| App Name | App Type | Developed By | Supported Banks |
|---|---|---|---|
| BHIM | UPI App | National Payments Corporation of India | All banks |
| Google Pay | UPI App | All banks | |
| Paytm | UPI App | Paytm Payments Bank Limited | All banks |
| PhonePe | UPI App | PhonePe Private Limited | All banks |
| Amazon Pay | UPI App | Amazon | All banks |
| UPI App | All banks | ||
| SBI Anywhere Personal | Banking App | State Bank of India | State Bank of India |
| HDFC Bank MobileBanking | Banking App | HDFC Bank | HDFC Bank |
| iMobile by ICICI Bank | Banking App | ICICI Bank | ICICI Bank |
| Axis Mobile | Banking App | Axis Bank | Axis Bank |
| Kotak – 811 & Mobile Banking | Banking App | Kotak Mahindra Bank | Kotak Mahindra Bank |
| YES Mobile | Banking App | YES BANK | YES BANK |
| PNB One | Banking App | Punjab National Bank | Punjab National Bank |
| BOI Mobile | Banking App | Bank of India | Bank of India |
| Canara e-Infobook | Banking App | Canara Bank | Canara Bank |
| Union Bank Mobile Banking | Banking App | Union Bank of India | Union Bank of India |
Note: This list is not exhaustive and there may be other UPI apps and banking apps available in India. The list is based on the popularity and availability of these apps.
FAQs on UPI Charges
UPI transactions are usually free of cost, but some banks may charge a nominal fee for certain transactions such as cash withdrawals from ATMs, transferring funds to a non-UPI bank account, or other value-added services.
Banks do not usually charge customers for UPI transactions. However, they may charge merchants or businesses for accepting payments through UPI. The charges may vary depending on the bank and the type of transaction.
Yes, there is a limit on the amount of money that can be transferred through UPI. The limit may vary from bank to bank, but it is generally capped at Rs. 1 lakh per transaction. However, some banks may allow higher limits for certain types of transactions such as bill payments or online purchases.
No, UPI transactions are not subject to any additional charges during weekends or holidays. They are processed in real-time, and the charges, if any, are applicable as per the bank’s terms and conditions.
Yes, you can reverse a UPI transaction if you have made a mistake or if the transaction has failed due to technical reasons. However, the reversal process may vary depending on the bank and the type of transaction.
You will receive a transaction confirmation message on your registered mobile number or email ID after every successful UPI transaction. The message will also contain details such as the amount transferred, transaction ID, and any applicable charges.
You can check the UPI charges applicable for your bank account by visiting your bank’s website or mobile app. The charges may vary depending on the type of transaction and the bank’s policies.
Yes, UPI is considered a safe and secure mode of payment in India. UPI transactions are encrypted and processed through secure servers, and the interface uses multi-factor authentication to ensure the security of your transactions.
Conclusion
UPI has revolutionized the way we make payments and transfer funds in India. It offers a simple, fast, and secure way to make digital transactions without the need for cash or physical cards.
The UPI ecosystem is constantly evolving, with new features and functionalities being added to enhance the user experience.
While UPI transactions are generally free of cost, it is important to be aware of any charges that may be applicable for certain transactions or value-added services.
By understanding the various features and advantages of UPI, as well as the charges and fees associated with it, you can make informed decisions when using the platform for your financial needs.
Overall, UPI has brought about a major shift towards a cashless economy and has played a significant role in promoting financial inclusion and digital literacy in India.
With the increasing adoption of UPI and other digital payment platforms, the future of digital transactions in India looks promising.