UPI Basics
What is UPI?
Unified Payments Interface · यूनिफाइड पेमेंट्स इंटरफेस
India's instant, 24×7 bank-to-bank payment system run by NPCI. P2P and most small merchant QR scans stay free; some large P2M tickets take MDR from 15 Oct 2026.
Launched by NPCI in 2016, UPI moves money instantly between any two bank accounts using a smartphone app. Instead of sharing account numbers and IFSC codes, users identify each other with a simple UPI ID (VPA) or QR code, and transfers settle within seconds at any hour of any day.
For merchants, UPI beat cards because bank-to-bank P2M sat at 0% MDR from January 2020. From 15 October 2026 a 0.4% merchant discount rate applies to some P2M payments above ₹2,000 (cap ₹300). P2P, tickets of ₹2,000 or less, and small QR merchants up to ₹1 lakh/month stay free. RuPay credit card on UPI above ₹2,000 is a separate interchange product.
Every UPI payment needs two things: a valid VPA linked to a real bank account, and the payer's UPI PIN entered on their own device. No OTPs are ever shared with the payee — anyone asking for your PIN or OTP to 'receive' money is running a scam.
UPI: quick answers
Is UPI free for merchants?
P2P is free. P2M of ₹2,000 or less is free. Small QR shops up to ₹1 lakh/month stay free. Other P2M above ₹2,000 may take 0.4% MDR from 15 October 2026 — not a government tax. RuPay credit-card-on-UPI is a separate interchange product.
Does UPI work at night and on holidays?
Yes — UPI runs 24×7×365, including bank holidays.
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