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For a normal domestic merchant payment made through the prescribed BHIM-UPI or BHIM-UPI QR mode in India, your bank or payment-system provider should not add a UPI transaction fee to the payer. The Income Tax Department says the no-charge rule covers the payer and beneficiary for prescribed electronic modes, and that charges including merchant discount rate (MDR) do not apply to those payments from 1 January 2020. You can still see a higher checkout total, a separately disclosed service charge, or currency-conversion cost on an international payment, so check the merchant, amount and any line items before approving.
What “without extra fees” means on a merchant UPI payment
There are three different money flows that are often confused:
- Your UPI payment amount: the amount you authorize to the merchant.
- UPI or payment-system charges: a fee imposed by a bank or system provider on the payer or beneficiary for the prescribed payment mode.
- The merchant’s own price or a separately disclosed charge: a delivery fee, convenience fee, service fee, tax, surcharge or other checkout line item that changes the amount you are asked to pay.
The first two are not the same. The Income Tax Department’s explanation of section 10A of the Payment and Settlement Systems Act says that “no Bank or system provider shall impose any charge on a payer making payment, or a beneficiary receiving payment, through electronic modes prescribed under Section 269SU of the Income-tax Act 1961.” The prescribed modes listed there include UPI (BHIM-UPI) and UPI QR (BHIM-UPI QR). The department also says that any charge, including MDR, does not apply to payments through those modes on or after 1 January 2020. Read the full explanation at the Income Tax Department’s section 269SU guidance.
That rule does not make every product or checkout total free. A merchant can sell an item at any price, and a platform may show a separately described charge for a service. Your protection is to distinguish the UPI payment rail from those commercial charges and to approve only the amount you have checked.
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Which domestic UPI payments have the no-charge treatment?
| Payment situation | What the official material establishes | What you should check |
|---|---|---|
| Domestic BHIM-UPI payment to a merchant | The prescribed mode is covered by the government’s no-charge description for the payer and beneficiary. | Merchant name, amount and any separate checkout line item. |
| Domestic BHIM-UPI QR payment | The prescribed UPI QR mode is included in the same explanation. | That the QR resolves to the intended merchant, not a personal or unrelated account. |
| PPI-on-UPI transaction | NPCI’s FAQ says there are no charges to the customer or PPI holder for UPI transactions. | The issuer’s terms for any wallet balance, funding or other service feature; the FAQ does not establish that every wallet-related term is free. |
| International merchant QR payment | NPCI describes QR payments at select international locations, but tells users to review exchange rates and applicable fees. | Final amount in both foreign and Indian currency, exchange rate and any fee shown in the app. |
The central answer therefore applies most directly to a domestic merchant transaction using the prescribed BHIM-UPI modes. Do not extend it automatically to cross-border currency conversion or to every fee associated with a wallet or other payment product.
How to pay a domestic merchant without an added UPI charge
1. Start from the merchant’s official payment point
At a physical store, ask whether the merchant accepts UPI and use the QR displayed at the counter or on the merchant’s approved point-of-sale screen. For an online order, choose the site’s or app’s UPI payment option. NPCI describes online merchant payment as a flow in which the merchant supplies a payment address and you authorize the request in your UPI application. UPI payments are designed to be instant and available 24/7, according to NPCI’s UPI Frequently Asked Questions.
A QR code is an instruction for where to send money, not proof that the destination is genuine. If a printed QR has been covered with another sticker, or a screen displays an unexpected account name, stop and ask the merchant to verify it.
2. Open your UPI application and scan or select UPI
Use the app’s ordinary “Scan and pay,” “Pay by UPI,” or equivalent function. For an online checkout, selecting UPI may open your installed UPI application or present a payment request for you to approve. The exact button names differ by app, so follow the normal payment path rather than a link or message asking you to install an unfamiliar application.
3. Verify the recipient before entering your PIN
Check the merchant or beneficiary name shown by the app. Compare it with the shop name, invoice or online checkout. A familiar logo, phone number or QR label is not enough if the final account name is different. If you cannot identify the recipient, cancel and have the merchant generate the payment request again.
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4. Compare the amount with the merchant’s total
Look at the exact amount displayed in the UPI app. For a store purchase, compare it with the amount on the bill. For an online order, compare it with the checkout total, including tax, delivery and any separately listed service charge. A difference is a reason to pause, not to assume that the extra amount is a UPI fee.
5. Inspect any separate fee or surcharge line
If the checkout total is higher than the advertised price, read the itemized explanation. It may be a product price, tax, delivery charge, convenience fee or another merchant-described amount. The reviewed government and NPCI pages establish the no-charge treatment for the prescribed payment mode; they do not determine the validity of every possible merchant surcharge in every commercial setting. Ask the merchant or platform to explain an unexplained line before you authorize.
6. Authorize inside the UPI app
Approve the payment using your normal in-app authentication. Enter your UPI PIN only on the secure authorization screen in your UPI application. Never tell the merchant, courier, caller or anyone else your UPI PIN; a merchant does not need it to receive money. NPCI’s online-payment description places PIN authorization in the customer’s UPI app.
7. Confirm the result and keep the reference
Wait for the app to show success and, where available, note the transaction reference or download the receipt. If the app says “pending,” do not immediately pay again. Check the transaction history and ask the merchant to verify receipt before starting a second payment, because a delayed status can otherwise lead to a duplicate debit.
Online checkout: a fee-free UPI check before you approve
- Select the merchant’s UPI option at checkout.
- Confirm that the checkout page shows the same order, merchant and total that you intend to pay.
- Continue to the UPI application or approve the payment request there.
- Compare the amount and recipient displayed in the UPI app with the checkout page.
- Stop if either the merchant name or amount differs. Ask the merchant or platform to explain the difference before authorizing.
- Authorize with your UPI PIN in the app, then return to the checkout page and confirm the order status.
Do not treat a “pay” link sent in an unsolicited message as equivalent to the merchant’s checkout flow. A payment request can move money from you when you approve it; it is not a mechanism for receiving a refund. For a legitimate refund, the merchant should not need your UPI PIN.
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Why MDR is not a fee you should see as a UPI customer
MDR, or merchant discount rate, is a charge within the merchant payment ecosystem. It is not the same as a fee typed into the customer’s UPI authorization screen. The Prime Minister’s Office says MDR was made zero for RuPay debit card and BHIM-UPI transactions from January 2020. Its published FY 2024–25 incentive-scheme announcement lists zero MDR for UPI person-to-merchant transactions up to ₹2,000 and over ₹2,000 for small and large merchants. See the Prime Minister’s Office announcement.
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In practical terms, seeing a merchant’s price or a checkout service charge does not prove that UPI has added MDR. Ask for an itemized explanation instead of accepting an unexplained “UPI fee” as a network requirement.
PPI-on-UPI: what NPCI’s no-charge statement covers
A prepaid payment instrument (PPI) can be used on UPI where the issuer supports that arrangement. NPCI’s FAQ states: “There are no charges to be paid by the customer/ PPI holder for UPI transactions.” That statement is specific to PPI-on-UPI transactions. It should not be rewritten as a claim that every issuer service, wallet funding method, withdrawal, balance-related term or optional feature is free.
Before using a PPI, read the issuer’s disclosed terms for the particular action you are taking. If the payment screen shows a fee or a different payable amount, pause and identify what the line refers to. The no-charge statement for the UPI transaction itself does not erase terms that may apply to a separate wallet service.
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International UPI QR payments need a separate fee check
Domestic BHIM-UPI rules do not answer every question about a payment made at an overseas merchant. NPCI’s UPI Global Acceptance information covers QR-based payments at select international merchant locations and specifically advises users to check the final amount in both currencies, along with applicable exchange rates or fees.
- Confirm that the merchant and country are supported by your UPI service.
- Review the foreign-currency amount.
- Review the Indian-rupee amount that will be debited.
- Read the displayed exchange rate and any applicable fee.
- Approve only when both currency values and the total cost are clear.
An international QR payment can therefore have a currency-conversion cost or another applicable charge even though a domestic prescribed BHIM-UPI payment has no payer or beneficiary charge under the cited government explanation. Never infer the exchange rate from a sign at the store; use the final values shown by the app.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What to do when the amount is higher than expected
The merchant price is higher, but the UPI amount matches the checkout
Check the invoice for taxes, delivery, packaging, convenience or service charges. This is a pricing question, not evidence of a UPI network fee. Ask the merchant for an itemized explanation and decide whether to proceed.
The UPI app shows a different merchant name
Cancel the payment and ask the merchant to verify the QR or payment address. Do not rely on a verbal assurance that an unrelated name belongs to the shop.
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The UPI app shows a different amount
Do not authorize. Compare the app request with the checkout page or bill and ask the merchant or platform to regenerate or correct the request.
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Capture or note the itemized description and ask what service it covers. The official sources establish the prescribed-mode no-charge rule, but they do not provide a universal ruling on every merchant surcharge. If the explanation is unacceptable, use another payment method or abandon the purchase rather than authorizing an amount you did not agree to.
The payment is pending or appears twice
Check your UPI transaction history and the merchant’s order status before trying again. Give the merchant the transaction reference if the debit is shown but the order is not. Avoid sending a second payment while the first result is unresolved.
Someone asks for your PIN to complete or reverse the payment
Decline. Your UPI PIN is for authorizing a debit in your app and must remain secret. A merchant or support caller should not need it to collect a payment or process an ordinary refund.
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A quick pre-authorization checklist
- Location: Is this a domestic Indian merchant payment or an international QR transaction?
- Mode: Is the payment going through the merchant’s BHIM-UPI or BHIM-UPI QR flow?
- Recipient: Does the name in the app match the intended merchant?
- Amount: Does the app total match the bill or checkout?
- Line items: Is every tax, delivery or service charge explained?
- International details: If abroad, have you checked both currencies, the exchange rate and any fee?
- Security: Are you authorizing only inside your UPI app, without sharing your PIN?
- Status: If the transaction is pending, have you checked history before paying again?
Common misconceptions about “free UPI”
“Zero MDR means the product must cost the same when I choose UPI.”
No. MDR is a merchant-side payment-ecosystem charge. It does not set the merchant’s product price or prevent every separately disclosed checkout charge.
“A fee on an international QR payment contradicts the domestic rule.”
No. NPCI treats international acceptance separately and tells users to inspect exchange rates and applicable fees. Currency conversion and cross-border terms require their own check.
“No customer charge for PPI-on-UPI means every wallet action is free.”
No. NPCI’s statement concerns the PPI-on-UPI transaction. Issuer terms for other wallet or balance services can be separate.
“If a merchant asks for my PIN, it must be part of UPI.”
No. PIN entry belongs in your UPI app’s authorization screen. Sharing the PIN gives another person the information needed to authorize a debit.
Official sources and scope of the guidance
The Income Tax Department’s page is the legal-policy explanation for prescribed electronic modes, including BHIM-UPI and BHIM-UPI QR, and gives 1 January 2020 as the effective date for the no-charge treatment described there. NPCI’s FAQ supplies the online merchant-payment flow and the PPI-on-UPI customer-charge statement. The Prime Minister’s Office announcement supplies the FY 2024–25 incentive details and its January 2020 zero-MDR policy history. NPCI’s UPI Global Acceptance page supplies the international-currency and fee warning. None of these pages provides a universal complaint procedure for every merchant surcharge, so the first practical remedy for an unexplained amount is to request an itemized explanation before approval.
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