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For ordinary UPI payments in India, the National Payments Corporation of India (NPCI) lists a ceiling of up to ₹1 lakh per transaction. That is a per-transaction ceiling, not a promise that every bank account or app will allow the full amount: banks can apply lower internal limits, and category-specific rules can raise or restrict the ceiling.
Customers do not pay a UPI transaction charge under the Ministry of Finance’s stated policy, and person-to-person (P2P) transfers remain free. Merchants are treated separately. A Department of Financial Services FAQ dated 15 September 2026 announces a new merchant discount rate (MDR) schedule that is stated to take effect on 15 October 2026; on 13 October 2026, that date was still in the future.
UPI limits and charges at a glance
| Question | Answer |
|---|---|
| What is the ordinary UPI limit? | Up to ₹1 lakh per transaction under NPCI’s normal UPI guidance. |
| Is ₹1 lakh guaranteed for every user? | No. A bank or payment app may set a lower internal limit within NPCI’s ceiling. |
| Are customers charged for UPI? | The Ministry of Finance says consumers will not face UPI transaction charges and P2P transactions remain free. |
| When does the announced merchant MDR schedule start? | 15 October 2026, according to the Department of Financial Services FAQ dated 15 September 2026. |
| Who bears MDR? | MDR is a merchant-side cost under the cited framework; the FAQ says it cannot be passed on to UPI customers. |
The most important distinction is between a network ceiling and an account’s practical limit. A second distinction is between a customer’s payment and the merchant’s acceptance cost. Treating either pair as the same is the source of most inaccurate UPI-limit and fee explanations.
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The standard ceiling is per transaction
NPCI’s UPI FAQ describes normal UPI as having a limit of up to ₹1 lakh per transaction. The wording matters: it is a ceiling for one transaction, not a universal daily allowance. Your bank may also impose a daily aggregate cap, a number-of-transactions cap, or a lower per-transaction amount. Those bank-level controls are separate from NPCI’s published ceiling.
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Why your effective limit can be lower
When a payment below ₹1 lakh is declined, the network ceiling is not necessarily the reason. Banks may set internal limits within NPCI limits, and an app can display or enforce the bank’s rule. The bank may also apply risk controls, account-level restrictions, newly added beneficiary rules, or a category-specific policy. The practical limit for your account is therefore the lowest applicable rule.
- Check the bank account selected in the UPI app, not only the app’s general help page.
- Look for both a per-transaction and a daily limit; they are different controls.
- Confirm whether the payment is P2P or P2M and whether the merchant belongs to a regulated or specially classified category.
- If the amount is urgent, ask the bank which limit caused the decline rather than repeatedly retrying the same payment.
NPCI circular OC 185B, dated 28 August 2025, also makes clear that member banks may set internal limits within NPCI ceilings. Its higher limits apply only to specified categories and verified merchants, with acquiring members required to follow applicable NPCI guidelines. The circular says the P2P limit remains under existing guidance.
Higher ceilings for specific categories
The ₹1 lakh figure should not be presented as universal because NPCI identifies higher ceilings for particular uses. These are category limits, not a blanket increase for all UPI users or merchants.
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|---|---|---|
| Ordinary UPI transaction | Up to ₹1 lakh per transaction | Normal ceiling; bank or app limits may be lower. |
| Capital markets, collections, insurance and foreign inward remittances | Up to ₹2 lakh per transaction | Only for the listed categories, subject to applicable bank and participant controls. |
| IPO and Retail Direct Scheme transactions | Up to ₹5 lakh per transaction | Specific transaction types; not a general UPI limit. |
OC 185B adds enhanced limits for listed categories aligned with tax payments and other specified merchant categories. Because the circular’s annex contains the category-by-category figures, verify the exact category and amount against the current circular before relying on a higher ceiling. A merchant’s verification status and the acquiring member’s compliance can also affect eligibility.
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Is there a daily UPI limit?
People often ask for the “UPI limit per day,” but NPCI’s commonly quoted ₹1 lakh figure is expressed per transaction. A daily total is determined by the bank or account provider’s own controls and may be lower than the sum you would calculate from the network ceiling. Banks can combine a daily rupee cap with a transaction-count cap, so two users with the same UPI app may have different practical limits.
For an exact daily figure, open the bank account’s UPI settings or contact the issuing bank. If the app shows a limit, treat it as account- or bank-specific unless it explicitly identifies an NPCI ceiling. Do not infer that a category eligible for ₹2 lakh or ₹5 lakh automatically receives that amount for unrelated transfers.
Are UPI payments free for customers?
Person-to-person transfers
A Ministry of Finance release dated 8 August 2026 states: “Consumers making payments will not face any transaction charges.” The same release says all person-to-person transactions will remain free. This covers the customer-facing charge question for ordinary P2P use: the sender should not be billed a UPI transaction fee under that policy statement.
Person-to-merchant payments
The customer-facing result is also no charge under the Ministry’s statement, but the merchant’s cost is a separate accounting issue. A merchant may have a contractual fee for acquiring, software, settlement, support or another service. The absence of a customer transaction charge does not prove that every provider service is free.
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PPI-on-UPI transactions
NPCI’s FAQ separately says customers or prepaid payment instrument (PPI) holders are not charged for the PPI-on-UPI transactions covered by its interoperability answers. That is a narrower statement than the Ministry’s broader consumer-charge announcement, but it points in the same direction for the covered PPI use case.
What merchant MDR is scheduled to change on 15 October 2026
The detailed Department of Financial Services FAQ is dated 15 September 2026 and says its revised MDR framework takes effect on 15 October 2026. The figures below are therefore an announced schedule, not a statement that the rates were already effective on 13 October 2026.
| Covered transaction or classification | Scheduled MDR | Threshold or cap |
|---|---|---|
| General person-to-merchant (P2M) | 0.4% | Applies above ₹2,000; for transactions of ₹75,000 or more, capped at ₹300 per transaction. |
| General P2M at or below ₹2,000 | No MDR | No MDR under the announced schedule. |
| Named special sectors, including railways, telecom, insurance and fuel | Flat ₹5 | For transactions above ₹2,000 in the categories named by the FAQ. |
| Capital-market transactions | 0.02% | Capped at ₹300 per transaction. |
| P2PM merchant classification with up to ₹1 lakh monthly UPI-QR receipts directly into the account | Zero MDR | Continues under the described framework, subject to classification and provider confirmation. |
How the 0.4% rate and ₹300 cap interact
For a covered general P2M transaction above ₹2,000, calculate 0.4% of the transaction value, then apply the ₹300 maximum where the value is ₹75,000 or more. At ₹75,000, 0.4% equals ₹300; at higher values the percentage calculation would exceed ₹300, so the cap limits the MDR to ₹300. The schedule does not impose MDR on a general P2M payment of ₹2,000 or less.
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The FAQ names railways, telecom, insurance and fuel among sectors assigned a flat ₹5 above ₹2,000. That flat amount is not interchangeable with the general 0.4% formula. Capital-market transactions are listed separately at 0.02%, with a ₹300 cap.
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Why the effective date must be kept visible
The 15 September publication date is the announcement date; 15 October is the stated start date. A merchant reading the policy before 15 October 2026 should not describe the revised rates as already operating. After the stated start date, merchants should still confirm implementation with their acquiring provider, especially if a circular, category definition or agreement has changed.
Who pays UPI MDR?
Under the Ministry FAQ’s framework, MDR is a merchant-side cost and cannot be passed on to UPI customers. A customer should not be asked to add a separate “UPI fee” merely because the merchant incurs MDR under this schedule.
This rule does not answer every commercial question in a merchant contract. NPCI explains that merchants partner with an acquiring bank to accept UPI and that funds reach the merchant account or a pool account according to the agreement. An acquiring bank, payment aggregator or software provider may have separately negotiated onboarding, settlement, integration, support or other service terms. Those terms should not be described as MDR, and the MDR rule should not be taken as a guarantee that every provider service has no charge.
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How P2PM classification affects small merchants
The Ministry FAQ says merchants classified as P2PM and receiving up to ₹1 lakh per month through UPI QR directly into their accounts continue at zero MDR. Classification determines applicability. Therefore, a single payment above ₹2,000 does not by itself make an otherwise exempt P2PM merchant liable under the described framework.
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Merchants should ask their acquiring provider how the business is classified, whether receipts go directly to the merchant account as required, how the ₹1 lakh monthly threshold is measured, and what happens when the threshold or classification changes. Keep the provider’s written terms because a merchant’s agreement may contain obligations beyond the policy MDR itself.
P2P and P2M: the practical difference
| Case | Limit question | Charge question | What to check |
|---|---|---|---|
| Person paying another person (P2P) | NPCI’s normal ceiling is up to ₹1 lakh per transaction; the bank may set less. | The Ministry says P2P remains free. | Your bank’s daily, per-transaction and transaction-count limits. |
| Person paying a business (P2M) | Category, merchant verification and bank rules can affect the usable amount. | The customer is not charged under the Ministry statement; the merchant MDR schedule is separate. | Whether the merchant category is general, special-sector, capital-market or P2PM. |
| Merchant accepting UPI | Acceptance depends on the acquiring arrangement and applicable category rules. | Scheduled MDR may apply from 15 October 2026; P2PM exemptions and caps can change the calculation. | Classification, settlement terms, integration and all contractual service fees. |
What to do when a UPI payment fails
- Identify the payment type. Confirm whether you are sending to a person, paying a merchant, buying an IPO, making a tax-related payment or using another special category.
- Check the amount against the normal ceiling. An ordinary transfer above ₹1 lakh may require a permitted category or another payment route; do not assume the higher ₹2 lakh or ₹5 lakh figures apply.
- Check the bank’s own limits. Review the selected account’s UPI settings for per-transaction, daily and transaction-count restrictions.
- Verify the beneficiary or merchant. A category-specific ceiling may require a verified merchant or compliant acquiring member.
- Ask the bank for the failure reason. If the amount is below ₹1 lakh but still fails, request clarification on internal limits or risk controls instead of repeatedly retrying.
- For merchant disputes, request a fee breakdown. Ask the acquiring provider to identify MDR separately from settlement, software, onboarding or other contractual charges.
Merchant checklist before the scheduled MDR date
- Record whether the business is classified as P2M or P2PM.
- Confirm whether UPI-QR receipts settle directly into the merchant account and how the provider measures the ₹1 lakh monthly P2PM threshold.
- Map each business line to the general, named special-sector or capital-market category in the 15 September 2026 FAQ.
- Ask for the effective date and implementation method in the acquiring agreement: the published schedule says 15 October 2026.
- Confirm that customer receipts will not include a separately passed-through MDR amount under the Ministry framework.
- Obtain a written list of any non-MDR service charges so they are not mistaken for the policy rate.
Bottom line for users and merchants
Use ₹1 lakh as NPCI’s ordinary per-transaction ceiling, not as a guaranteed daily or account limit. Higher ₹2 lakh and ₹5 lakh ceilings are reserved for the specific categories NPCI names. Your bank can set a lower practical limit. Customers should not pay a UPI transaction charge, while merchants need to evaluate MDR and other contract terms separately. The detailed MDR rates—0.4% above ₹2,000 for general covered P2M, a ₹300 cap at or above ₹75,000, ₹5 for named special sectors above ₹2,000, 0.02% for capital-market transactions, and the P2PM zero-MDR condition—are scheduled in the 15 September 2026 Ministry FAQ to take effect on 15 October 2026.
Frequently Asked Questions
Does the ₹1 lakh UPI limit reset every day?
NPCI states the ordinary figure as up to ₹1 lakh per transaction, not as a universal daily allowance. Any daily reset, aggregate cap or transaction-count limit comes from your bank or account provider.
Can a merchant add MDR to my UPI bill?
The Department of Financial Services FAQ says merchant MDR cannot be passed on to UPI customers under its framework. Ask for an itemized explanation if a separate UPI fee appears.
Where can a merchant confirm its P2PM status?
Ask the acquiring bank or UPI acceptance provider for written confirmation of the classification, monthly threshold measurement and settlement arrangement. The Ministry FAQ says classification determines whether the zero-MDR condition applies.
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