The Unified Payments Interface (UPI), India’s popular real-time payment system, has implemented a framework regarding transaction charges for specific merchant categories. While UPI remains free for standard person-to-person (P2P) transfers, costs are now associated with payments made for fuel, mobile phone purchases, and restaurant bills under certain conditions.

The fee structure is designed to cover the operational costs of processing digital payments. For fuel purchases, the charges are often linked to the merchant discount rate (MDR), which is the fee a merchant pays to a bank for accepting payments. In the context of restaurant bills and high-value phone purchases, the application of these charges depends on the specific payment gateway and the banking partner involved.

NDTV reports that these charges are not universal across all UPI apps or banking platforms. Instead, they are applied based on the merchant category code (MCC) assigned to the business. Consumers are advised to check their transaction receipts or the payment app interface before completing a purchase, as some merchants may choose to absorb these costs while others pass them on to the consumer. The shift aims to make the digital payment infrastructure more sustainable as transaction volumes continue to grow exponentially across the country. While the system is intended to be transparent, the variation in how different banks and merchants apply these fees has led to confusion among users regarding when and why they are being charged.