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UPI or the unified payment interface which was introduced by the NPCI has changed the way we handle our finances. Making payments has become very easy and secure with the introduction of the unified payment interface. It enables instant transfers between personal accounts, banks, and merchant accounts through mobile apps. It is currently the most convenient and preferred payment system in India.
To expand the scope of UPI, the RBI has suggested several changes to rules and regulations around it. Most of these have come into effect from January 1st 2024. Among these are important guidelines for UPI transaction charges. Let us now read on to find out more about what are the new rules regarding UPI transaction charges, the upper limit on UPI transfers per day, interchange fees, etc.What is a Prepaid Payment Instrument (PPI)?
A prepaid payment instrument or a PPI is a digital wallet that enables you to buy goods and services online by sending or receiving money stored in the wallet. The wallet has to be preloaded. Other than wallets (Paytm, SODEXO vouchers, Amazon Pay, Freecharge, etc.), physical smart cards, secure tokens, vouchers, or any other method that allows access to prepaid funds come under PPIs. You can make a payment through PPI by scanning a QR code, entering the receiver’s UPI ID, or using other modes of payment that the wallet offers. Just recently, the NPCI has allowed PPIs to be a part of the interoperable UPI ecosystem. This means that after the users link their PPI wallets to UPI, they can transact seamlessly using Scan and Pay on all UPI interoperable QR codes. Thus, this allows the use of PPI wallets at all merchant locations. The user can also send or receive money to any other wallet user.
UPI Transfer Limit Per Day
- The UPI transaction limit per day is Rs. 1 lakh according to the NPCI
- The transaction limits for UPI payments to educational institutions and hospitals has been increased to Rs. 5 lakhs.
- The maximum UPI daily transfer limit varies across banks. And it is in the range of Rs. 25,000 to Rs. 1 lakh.
- Some banks have set UPI transfer limits per week or per month instead of a day
UPI Transaction Limits for Leading Indian Banks
The common limit set by the NPCI is Rs. 1 lakh in a day or up to 20 transactions to the maximum. However, banks may have their individual limits. Here is a table showing them.
Bank | Daily limit on UPI | Transaction limits on UPI |
|---|---|---|
SBI | Rs. 1,00,000 | Rs. 1,00,000 |
IDFC | Rs. 1,00,000 | Rs. 25,000 |
PNB | Rs. 50,000 | Rs. 25,000 |
Indian Overseas Bank | Rs. 1,00,000 | Rs. 50,000 |
Bank of India | Rs. 1,00,000 | Rs. 10,000 |
Allahabad Bank | Rs. 1,00,000 | Rs. 50,000 |
ICICI | Rs. 1,00,000 | Rs. 1,00,000 |
Indian Bank | Rs. 1,00,000 | Rs. 1,00,000 |
HDFC | Rs. 1,00,000 | Rs. 1,00,000 ( Rs 5,000 for new customers) |
Canara Bank | Rs. 1,00,000 | Rs. 1,00,000 |
Axis Bank | Rs. 1,00,000 | Rs. 1,00,000 |
Bank Of Baroda | Rs. 25,000 | Not set |
IndusInd Bank | Rs. 1,00,000 | Rs. 1,00,000 |
IDBI Bank | Rs. 1,00,000 | Rs. 1,00,000 |
Union Bank of India | Rs. 200,000 | Rs. 1,00,000 |
SBI UPI Transaction Limit
The transaction limits for SBI's UPI service are as follows:
Single Transaction Limit - The maximum amount that can be transferred in a single UPI transaction is Rs 1,00,000, as determined by the National Payments Corporation of India (NPCI).
Daily Transaction Limit - SBI imposes a daily transaction limit of Rs 1,00,000 for UPI transfers. This limit applies whether the transactions are conducted through a single transfer or multiple transfers, with a maximum of 10 transactions allowed per day.
Weekly and Monthly Limits - Unlike the daily limit, there are no specified limits for the total value of UPI transfers per week or per month.
What Is Interchange Fees on UPI Payments?
UPI payment charges or interchange fees are charges levied on merchants when customers make UPI transactions through PPIs. When a customer pays through UPI by scanning the QR code at a store, the merchant must pay the interchange fee to the wallets or card issuers. UPI payment surcharges envelop the costs that are related to processing, accepting, and approval of transactions. This fee resembles the merchant discount rate charged by companies to businesses to process their debit or credit card transactions, thereby increasing the revenue for payment service providers and banks.The interchange fee will vary according to the merchant category codes from 0.5% to 1.1% of the transaction amount. The table below summarizes the interchange fee applicable for various categories.
Categories | Interchange Fee |
|---|---|
Fuel, education, agriculture, and utility payments | 0.5% |
Post office, telecom, utilities, agriculture, and education | 0.7% |
Supermarket payments | 0.9% |
Insurance, mutual funds, government, and railways | 1% |
Convenience stores and specialty retail outlets | 1.1% |
New Guidelines for Interchange Fees on UPI Transactions
As per the new guidelines issued by NPCI, an interchange fee of 1.1% of the transaction amount will be imposed on UPI transactions made via prepaid instruments such as wallets. Only specified categories of merchants such as online merchants, large merchants, and small merchants have interchange fees and that too for transactions only over Rs. 2,000. So, there will be no fee if the transaction amounts are up to Rs. 2,000. This will be executed from April 1, 2023.
What UPI Transactions Are Exempted from Transaction Fees?
- Not all UPI transactions have a transaction fee.
- Peer to peer (P2P) transactions or peer to peer merchant transactions (P2PM) between a bank and the prepaid wallet will not attract an interchange fee. P2PM includes small businesses whose monthly inward UPI transactions are estimated to be less than or equal to Rs. 50,000.
- So, sending money to family, friends, or any other individual’s or a small business merchant’s accounts will not draw a UPI surcharge.
- The interchange charges apply only to PPI merchant transactions, and there are no charges for the users of the PPI. Further, the usualUPI payment done between bank accounts does not entail any transaction fee to be paid.
Who Will Pay the Interchange Fees?
The merchants will usually pay the interchange fee to the card issuers or wallets. Interchange fees do not impact small merchants, and it will have to be paid only by medium category shopkeepers for transactions above Rs. 2,000. However, for high-value transactions, if the merchants decide to pass the higher cost to the customers, then they will be impacted.
The NPCI has decreed that now the PPI issuers have to pay 15 basis points as wallet-loading service charges to the remitter banks for recharging wallets with more than Rs.2,000. For instance, if you want to recharge your Paytm wallet, Paytm will pay a wallet loading charge of 0.15 percent to your bank. So, you don’t have to pay any additional fee to recharge your wallet. The burden of this fee thus falls on the PPI issuer making the UPI transaction more convenient and easy.
FAQs on UPI Transaction Charges:
1. What is the daily payment limit for UPI transactions according to the new guidelines?
The daily payment threshold for UPI transactions shall now be Rs. 1,00,000 according to the NPCI. However, for healthcare and educational institutions, the RBI has set a cap of Rs. 5 lakhs on daily UPI payments.
2. Are UPI transactions taxable?
No, UPI transactions are not taxable. However, other taxes applicable like the Goods and Services Tax (GST) may be imposed on goods or services bought via UPI transactions.
3. Who is responsible for wrong UPI transactions?
If you have made an incorrect payment, you can lodge a complaint about it on the National Payments Corporation of India (NPCI) website. You should also register a grievance about the wrong UPI transaction with your bank as soon as possible.
4. What are the charges for UPI transactions?
There is zero charge on UPI transactions for consumers. There are no additional charges on peer to peer (P2P) and peer to merchant (P2M) transactions. However, according to the new UPI guidelines, there is an interchange fee of 1.1% on UPI transactions more than Rs. 2,000 from 1st April 2023.