Are UPI Payments via RuPay Credit Cards Completely Free? Here's What You Need to Know

The rapid growth of digital payments in India has transformed the way people transact, thanks to platforms like Unified Payments Interface (UPI). With RuPay credit cards now being linked to UPI, many users are wondering whether such payments are entirely free or come with hidden charges. Let’s break down how UPI payments using RuPay credit cards actually work, what fees apply, and who bears the cost.

Understanding UPI and RuPay Credit Cards

Unified Payments Interface (UPI), developed by the National Payments Corporation of India (NPCI), is a real-time payment system that allows users to transfer money instantly between bank accounts using a mobile app. It has made everyday transactions—whether paying at a local store, sending money to friends, or paying bills—quick, secure, and hassle-free.

On the other hand, RuPay is India’s indigenous card payment network launched by NPCI to promote financial inclusion and reduce dependence on international card networks like Visa and Mastercard. Linking RuPay credit cards to UPI gives users the convenience of credit with the speed and simplicity of UPI transactions.

Are UPI Transactions via RuPay Credit Cards Free?

For most users, UPI payments remain completely free. However, when a transaction is made using a RuPay credit card, the rules are slightly different.

According to NPCI’s updated guidelines, transactions up to ₹2,000 made via RuPay credit cards on UPI are completely free of charge for both customers and merchants.

But for payments above ₹2,000, a merchant discount rate (MDR) of up to 1.1% is applied. This fee is borne by the merchant, not the customer. The purpose of this small fee is to cover infrastructure costs and ensure that the UPI ecosystem remains financially sustainable for banks and payment service providers.

Who Pays the Charges? Not the Customer

It’s important to note that customers are not charged any fee for making UPI payments—whether they use a bank account or a RuPay credit card. The MDR applies only to merchants accepting payments through UPI using credit cards for transactions exceeding ₹2,000.

This charge, introduced on April 1, 2023, ensures that payment service providers and banks can continue to invest in digital payment infrastructure without affecting the user experience. The government and NPCI have clarified that UPI will continue to be free for consumers, reinforcing India’s push toward a cashless and inclusive economy.

Benefits of Using RuPay Credit Cards on UPI

Using a RuPay credit card on UPI combines the convenience of UPI with the benefits of credit. Here’s what makes it advantageous:

• Seamless Digital Payments: You can use your credit card directly on popular UPI apps like PhonePe, Google Pay, and Paytm.

• Interest-Free Credit Period: Enjoy a credit window before the repayment is due, similar to traditional card usage.

• Rewards and Cashback: Many RuPay credit cards offer reward points, cashback, or discounts on purchases.

• Enhanced Security: Transactions are verified through secure authentication, reducing the risk of fraud.

• Support for Small Merchants: Even small businesses can accept credit payments via UPI without additional setup costs.

These benefits make RuPay credit cards an ideal option for both consumers and merchants looking for easy, secure, and affordable digital transactions.

Impact on the Digital Payment Ecosystem

The integration of RuPay credit cards with UPI is a significant step toward expanding India’s digital payment ecosystem. By combining UPI’s vast reach with the flexibility of credit, this initiative encourages higher transaction volumes, greater financial inclusion, and reduced cash dependency.

Small merchants also gain from this setup, as it allows them to accept credit card payments without needing an expensive POS (Point of Sale) machine.

Bottom Line

To sum up, UPI transactions made via RuPay credit cards are free for users, especially for payments up to ₹2,000. For higher-value transactions, a minimal fee of up to 1.1% applies—but only to merchants, not consumers.

This structure ensures a fair balance between free digital access for users and financial viability for service providers. With its growing acceptance, RuPay credit card integration with UPI is poised to further strengthen India’s digital economy, offering users a secure, simple, and smart way to pay.