--- title: "How To Accept UPI Payments: A Merchant's Guide For Global Businesses - Unlimit" url: 'https://www.unlimit.com/blog/payments/how-to-accept-upi-payments-a-merchants-guide-for-global-businesses/' image: 'https://cdn.unlimit.com/wp-content/uploads/2026/11/03153606/COVER-How-To-Accept-UPI-Payments_-A-Merchants-Guide-For-Global-Businesses.jpg' language: en published: '2026-10-30T15:35:22+00:00' modified: '2026-11-03T15:56:26+00:00' categories: - Payments --- > The index of this site for AI agents is at https://www.unlimit.com/llms.txt # How To Accept UPI Payments: A Merchant’s Guide For Global Businesses Merchant UPI allows businesses to accept payments through India’s Unified Payments Interface (UPI), a real-time bank-to-bank payment system widely used by Indian consumers. UPI payments have traditionally carried zero merchant discount rate (MDR). However, a proposed 0.4% MDR framework is scheduled to take effect after Diwali. ## Key takeaways - UPI is a real-time payment rail run by the National Payments Corporation of India (NPCI) and regulated by the Reserve Bank of India (RBI), enabling real-time, 24/7 bank-to-bank transfers. - Indian businesses can accept UPI payments through a participating bank or payment aggregator. International merchants without an Indian entity typically need a cross-border payment aggregator (PA-CB) authorised to support UPI transactions. - NPCI notified that a 0.4% MDR would apply to specific merchant payments above 2,000 INR, subject to a 300 INR cap. The proposed framework excludes person-to-person (P2P) payments, person-to-merchant (P2M) payments up to 2,000 INR, and qualifying small merchants. - The standard UPI limit is generally 1,00,000 INR per transaction, while verified merchants in specified categories, including insurance, capital markets and travel, may be eligible to receive up to 5,00,000 INR per transaction. - Businesses can accept UPI payments in several ways, including static QR codes, dynamic QR codes, intent-based payments, collect requests, and UPI AutoPay for recurring billing. ## What is UPI? UPI is a real-time payment system developed by NPCI under the RBI’s regulatory oversight. It runs on NPCI’s Immediate Payment Service (IMPS) rail, enabling money to move directly between participating bank accounts within seconds, 24 hours a day, including weekends and bank holidays. Since UPI is a payment rail, customers can pay through different UPI-enabled apps without sharing their bank account number or card details with the merchant. A UPI ID, also known as the Virtual Payment Address (VPA), is a unique identifier used to send and receive money through UPI. It typically follows the format name@bankhandle and links to one or more bank accounts on the UPI network. [NPCI’s](https://www.tribuneindia.com/news/business/upi-new-rules-from-august-1-here-are-the-key-changes) beneficiary-name verification requirements require UPI apps to display the bank-verified name for P2P and P2M payments, helping UPI users confirm they are paying the intended recipient. [756](https://www.npci.org.in/product/upi/product-statistics) banks were live on UPI in September 2026. During FY 2025–26, the network processed approximately 241.6 billion transactions worth 314.23 trillion INR and accounted for nearly [85.5%](https://www.outlookmoney.com/banking/upi-drives-85-per-cent-of-indias-payment-volumes-rtgs-handles-most-high-value-transfers) of India’s digital payments in the second half of 2025. ### Who runs UPI and who can use it NPCI operates the [UPI network](https://www.unlimit.com/blog/payments/blog-what-is-upi/) and sets its rules; the RBI provides regulatory oversight, and participating banks (the customer’s issuing bank and the merchant’s acquiring bank) maintain the accounts involved in each payment. Third-party application providers (TPAPs), including Google Pay, PhonePe and Paytm, offer UPI payment interfaces alongside apps developed by participating banks. BHIM is another UPI-enabled app, operated by NPCI’s subsidiary, NPCI BHIM Services Limited. Customers with eligible bank accounts at participating banks can use a linked UPI-enabled app to make payments. Since UPI is interoperable, customers can generally pay a merchant’s UPI ID or QR code from a different UPI app than the one the merchant uses. ## How UPI transactions work A [UPI payment](https://www.unlimit.com/blog/payments/upi-for-businesses-the-complete-guide/) moves funds between bank accounts in near real time, with NPCI routing transaction requests between the participating banks. 1. The customer initiates a UPI payment by either scanning the merchant’s QR code or approving a Collect request. The merchant’s checkout or payment service provider (PSP) determines which payment options are available. 2. The customer’s UPI app routes the transaction request through NPCI to the relevant bank. 3. The customer authorises the transaction, typically using their UPI PIN. Applicable [RBI authentication requirements](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12898) and permitted exemptions determine the factors required for a particular transaction. 4. The issuing bank debits the customer’s account, and the UPI network confirms or declines the transaction. The merchant receives the payment status through its acquiring bank or payment provider. 5. Settlements to the merchant’s designated account follow the applicable banking and provider arrangements. ## Who can accept UPI payments? UPI acceptance largely depends on where a business is legally registered. ### For merchants with an Indian entity Indian businesses, including private limited companies, LLPs, partnerships and sole proprietorships, can accept UPI by onboarding with a participating bank or an RBI-authorised payment aggregator (PA). Typical requirements include: - **A registered business:** The merchant must provide the relevant business registration or ownership documents. - **A business bank account:** A current account with a participating bank is typically used to receive settlements. - **Tax documentation:** A PAN is generally required, while a GSTIN is needed where applicable. The bank or PSP need these documents for know-your-business (KYB) to verify the business, its owners and other required details. After verification, the merchant receives a VPA, usually one primary handle per merchant account, and links its business bank account for settlement. Businesses can also set up the UPI acceptance methods, such as static or dynamic QR codes, a UPI-enabled checkout, a payment link or another supported integration. ### For global merchants without an Indian entity According to the RBI’s [Regulation of Payment Aggregators Directions](https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12896), 2025, an overseas business without an Indian entity needs a Payment Aggregator-Cross Border (PA-CB) to accept UPI payments. The cross-border payment provider will process UPI payments received in INR and settle them to the merchant’s overseas account in their preferred payout currency. When onboarding with the provider, cross-border businesses may be subject to verifications covering the country of incorporation, business activities, ultimate beneficial owners, sanctions screening and the purpose of the transactions. The provider handles the applicable payment and foreign-exchange compliance processes, while the merchant must supply the required business and remittance documentation. Depending on the business model and transactions, supplying goods or digital services to customers in India may involve GST or other tax requirements. Merchants should plan for this in advance. ## The four ways a merchant can accept UPI How a merchant accepts UPI payments depends on whether the customer purchases offline or online. ### Static QR codes A static QR code is a printable code that encodes the merchant’s VPA. After a customer scans it, they must enter the payment amount themselves. It suits small shops, cafés, and in-person sales because it requires little setup and no checkout integration. However, because the amount and order reference aren’t automatically tied to a specific transaction, merchants should match payments to bank statements using the amount, timestamp, and payment reference. Many merchants add a secondary tag, such as a table identifier or invoice reference, to the payment note to make reconciliation easier. ### Dynamic QR codes A dynamic QR code is generated for individual transactions and includes the payment amount and order reference. Customers scan the code and confirm the details without manually entering the amount. This makes dynamic QR codes a better choice for POS terminals, invoices, and other e-commerce checkout flows where payments need to match specific orders. When integrated with the merchant’s payment system, they can simplify reconciliation and reduce errors caused by customers entering the wrong amount. ### UPI Intent (deep-link) With UPI Intent, a customer shopping on a mobile website or in an app clicks on the “Pay with UPI” button and is redirected to a supported UPI app. The payment details, including the payee, amount, and transaction reference, are pre-filled. The customer authorises the payment in their UPI app and returns to the merchant’s checkout. Intent is particularly useful for mobile commerce, but the merchant must independently verify payment status rather than relying solely on the customer’s return to the checkout page. ### UPI Collect (payment request) With UPI Collect, the merchant or its PSP sends a payment request to the customer’s UPI ID or mobile number, and the customer approves it in their UPI app. This can support certain remote payment and invoicing scenarios where the customer is not already at checkout. Since the customer must take an additional action, a request may expire or go unpaid. Merchants should clearly communicate the expiry, provide a way to initiate a new request, and check the original transaction status before retrying. NPCI [discontinued P2P](https://www.businessworld.in/article/npci-to-end-upi-collect-request-for-p2p-payments-in-oct-567598) UPI Collect requests from 1 October 2025 to help prevent fraud. This is distinct from merchant payment requests, which remain supported. ### UPI AutoPay UPI AutoPay lets merchants collect recurring payments, such as subscription fees, utility bills, and eligible investment contributions, under a mandate the customer authorises in advance. Under the RBI’s [Digital Payments – E-mandate Framework](https://www.outlookbusiness.com/ampstories/news/rbi-e-mandate-framework-2026-new-rules-for-auto-pay-upi-cards-wallets), 2026, subsequent recurring debits can generally be processed without additional authentication up to 15,000 INR per transaction. A higher threshold of 1,00,000 INR applies to specified categories, including insurance premiums, mutual fund subscriptions and credit-card bill payments. Customers must receive a [pre-debit notification](https://upstox.com/learning-center/personal-finance/rbi-s-new-e-mandate-rules/article-1569/) at least 24 hours before a recurring debit. Merchants should confirm the notification, retry, and mandate-management rules with their payment provider before implementation. ## How to set up UPI acceptance: Step by step Indian businesses and international merchants follow different onboarding routes. ### Setup path for an Indian merchant 1. **Choose a bank or payment aggregator:** Compare authorisation, settlement timelines, fees, reconciliation tools, and support before selecting a provider. 2. **Complete business verification:** Submit PAN, business registration documents, address and bank proof, beneficial-ownership details, and GSTIN where applicable. 3. **Link a business bank account:** This is the account used to receive settlements. 4. **Activate the merchant UPI ID:** The provider will arrange the merchant VPA and, where relevant, outlet-level identifiers. 5. **Configure payment methods:** Generate static or dynamic QR codes, integrate the provider’s checkout or SDK, or enable UPI Collect where supported. Use dynamic QR codes when payments need to be linked to specific orders. 6. **Test the complete payment flow:** Run low-value live transactions where permitted, test failure and refund scenarios, and confirm that payment statuses and reconciliation reports match the records. 7. **Go live:** Monitor successful payments, pending transactions, refunds and settlement mismatches. Establish a baseline before automating exception handling or scaling transaction volumes. ### Setup path for a global merchant (no Indian entity) 1. **Choose a PA-CB that supports UPI:** Check the provider’s authorisation against the RBI’s published records and confirm that it supports the business model, target markets and intended payment flow. 2. **Complete merchant KYC and KYB:** Provide incorporation documents, ultimate beneficial-owner details, information about business activities and any required sanctions-screening or remittance documentation. 3. **Sign the payment services agreement:** Review fees, settlement terms, foreign-exchange (FX) pricing, the refund process, dispute handling, and responsibilities for regulatory compliance. 4. **Integrate the payment solution:** Start with a hosted checkout or embedded payment form if available, or use the provider’s API or SDK for a more customised experience. 5. **Agree on settlement and payouts:** Confirm the supported payout currency, destination account, settlement schedule, FX conversion method and any associated fees. 6. **Test the end-to-end payment flow:** Begin with a limited rollout where appropriate. Verify payment confirmations, failed and pending transactions, refunds, settlement records and reconciliation. 7. **Go live and automate reconciliation:** Enable transaction-level and fee-level reporting so finance teams can match collections, deductions and payouts during each reporting period. ## UPI transaction fees under the October 2026 framework The MDR is a combination of fees deducted from a merchant’s payment proceeds and paid to the payment gateway, issuing bank, and card network. Since [January 2020](https://www.brut.media/in/articles/india/society/upi-charges-from-15-october-who-pays-0-4-mdr-on-payments-above-rs-2-000-and-what-stays-free), eligible bank-account-funded UPI merchant payments have operated under a zero-MDR framework. In September 2026, NPCI announced a new framework for specified P2M transactions. It was originally set to launch on 15 October 2026, but NPCI deferred the rollout on 13 October to account for the festive season. ### What merchants actually pay end-to-end Merchants should account for four potential cost components: 1. **MDR:** The merchant discount rate, where applicable under the relevant payment arrangement. 2. **Payment provider fees:** A bank or payment aggregator may charge separate commercial fees for its gateway, platform, integration, or other services. These are distinct from MDR. 3. **GST:** Applicable GST may increase the total cost of MDR or other taxable services. 4. **FX costs:** International merchants may also incur currency-conversion charges when their collections are converted for payout. For instance, if a 0.4% MDR and 18% GST on MDR apply to a 50,000 INR transaction, the MDR would be 200 INR and the GST would be 36 INR, bringing the combined cost to 236 INR, or approximately 0.47% of the transaction value. Before signing with a provider, merchants should ask for an itemised rate card covering MDR, platform or gateway fees, GST, settlement charges, refunds, hardware and, where relevant, FX conversion. ### Where zero MDR still applies The announced UPI charges framework includes exclusions for certain payment categories, such as: - P2P transfers - Merchant payments up to 2,000 INR - Qualifying small businesses, receiving up to 1,00,000 INR per month through UPI QR codes - Recurring UPI AutoPay payments. ### MDR on RuPay-credit-on-UPI RuPay credit-card payments made through UPI follow a separate framework from the proposed general P2M MDR framework. According to NPCI’s published FAQ, credit-linked UPI transactions, including RuPay credit cards and pre-sanctioned credit lines, are exempt from the new framework and will remain subject to their existing applicable guidelines. According to [Canara Bank](https://www.canarabank.bank.in/documents/d/guest/mdr-on-rupay-credit-card-on-upi-payments), MDR applies to specified RuPay credit-card payments through UPI above 2,000 INR from 1 June 2026. Indicative rates vary by merchant category but roughly range from 0.5% to 1.75%, excluding GST. ## UPI transaction limits and category caps The standard per-day limit for a UPI payer is 1,00,000 INR, but verified merchants in specific categories can receive up to 10,00,000 INR. Additionally, banks can set lower limits than the NPCI ceiling. ## Settlement, FX, and reconciliation For domestic merchants, settlement within one business day (T+1) is a common commercial arrangement. The actual schedule depends on the provider’s agreement, settlement cut-off times, holidays, and any applicable risk or compliance checks. Settlement is typically credited to the merchant’s linked business bank account. For international merchants operating under a PA-CB, collections may pass through an outward collection account maintained with an authorised dealer bank, in accordance with applicable RBI requirements. The 2025 Directions also prescribe a [25,00,000 INR](https://www.drnlegal.com/blog-post/rbi-s-new-directions-for-payment-aggregators-what-changed-for-cross-border-payments) cap per transaction for relevant PA-CB transactions. The merchant’s agreement with the provider should specify the payout currency, destination account, settlement frequency, FX conversion method, exchange-rate spread and applicable fees. Daily reconciliation helps merchants match successful payments to orders, settlements and fees. Hence, merchants should ask the bank or payment provider for reports containing, where available: - Transaction ID and UTR or bank reference number - Merchant order or invoice reference - Payment amount, status and timestamp - Settlement date and amount credited - MDR, provider fees and applicable GST - For cross-border payouts, the conversion rate, FX fees and final payout amount. Match these records against the order system and bank statement, and promptly investigate missing settlements, duplicate entries, refunds, and pending payments. A consistent reconciliation process reduces month-end surprises and gives finance teams a clearer view of the actual cost and timing of collections. ## Security, compliance, and dispute handling UPI transactions are authorised through a customer’s supported UPI app and bank authentication flow, typically using a UPI PIN. The applicable authentication factors depend on the transaction and any permitted exemptions, set by the RBI’s [Authentication Mechanisms for Digital Payment Transactions Directions, 2025](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12898). Merchants should ensure their bank, PSP or payment gateway supports the applicable flows rather than attempting to bypass authentication. UPI payments also mean merchants generally don’t need to collect customers’ card numbers or bank account credentials to accept payment. Merchants should never request a customer’s UPI PIN or OTP, and should verify payment status through their provider’s trusted confirmation or status-check mechanism. NPCI’s API usage guidelines issued in May 2025 also introduced compliance requirements for UPI apps, including security audits by a CERT-In-empanelled auditor. Merchants integrating through a bank or payment aggregator should confirm the provider’s current audit and security obligations. Additionally, the RBI’s 6 April 2018 circular requires [payment system data](https://www.azbpartners.com/bank/rbi-clarification-on-the-circular-on-storage-of-payment-system-data/) to be stored in India. If processing occurs outside India, the relevant data must be returned to India and deleted from systems abroad within the applicable timeframe. UPI disputes follow the applicable NPCI and participating-bank processes rather than the card-network chargeback model. Customers typically raise complaints through their UPI app or bank, and the merchant may receive the case through its acquiring bank or payment aggregator. Merchants should maintain transaction records, order references, payment confirmations, delivery evidence and refund logs so they can respond promptly when a complaint is raised. ## Choosing a UPI partner: A merchant’s checklist The right partner depends on how well their licence, fees, and key features match the business needs and budget. Here are a few questions to help. - Is the provider a PA licence holder (domestic) or a PA-CB licence holder (cross-border)? - What is their platform fee on top of the NPCI MDR schedule, and how is it disclosed? - What is their settlement timeline and payout currency? - What is their FX spread from INR to the preferred payout currency? - Do they support UPI Autopay and e-mandates for recurring collections? - What reconciliation feeds do they provide? - What is their dispute-resolution agreement and evidence-upload window? - Do they cover the wider India rail set alongside UPI? - What is their payment success rate and uptime record over the past 12 months? [Unlimit](https://www.unlimit.com/) is a global financial infrastructure provider with a [PA-CB licence](https://www.unlimit.com/blog/press-release/rbi-grants-unlimit-cross-border-licence-removing-barriers-for-india-to-global-markets/) that helps cross-border businesses accept UPI payments from their customers in India. Depending on the merchant’s setup, they can receive settlements either into an Indian domestic account or into a foreign business account. ## FAQ **Can non-Indian businesses accept UPI payments?**A business without an Indian entity can accept UPI through an eligible Payment Aggregator-Cross Border (PA-CB). The provider processes the customer’s payment in INR and arranges settlement under the merchant agreement. **How much does UPI cost a merchant after 15 October 2026?**The proposed UPI MDR framework did not take effect on 15 October 2026. NPCI deferred implementation on 13 October 2026 and will announce a revised date separately. Under the announced framework, specified merchant payments above 2,000 INR would generally attract a 0.4% MDR, subject to a 300 INR cap, with different rates for certain notified categories. Merchant payments up to 2,000 INR, person-to-person transfers and qualifying small merchants are among the stated exclusions. **What’s the fastest way to start accepting UPI internationally?**For an eligible international business, a hosted checkout or payment link from an authorised cross-border payment provider can reduce integration work. The merchant can later consider deeper API or SDK integration as payment volume or checkout requirements grow. To speed up onboarding, prepare incorporation documents, beneficial-owner details, business information and any required compliance or remittance documentation in advance. **Do I need an Indian entity to accept UPI?**A foreign business can accept UPI payments through an authorised cross-border payment provider without setting up an Indian entity. Businesses taking the domestic onboarding route generally need an eligible Indian business and banking arrangement. **Can a merchant pass the UPI MDR to the customer?**NPCI’s applicable rules and guidance restrict passing specified payment charges on to customers, and UPI app providers face separate restrictions on customer-facing fees. Merchants should check the current rules for the payment instrument and transaction type and account for acceptance costs through their overall pricing rather than adding an unauthorised surcharge. **What is the difference between a personal UPI ID and a merchant UPI ID?**A personal UPI ID lets an individual make or receive payments through a linked bank account. A merchant UPI ID is set up through business onboarding and linked to the merchant’s payment acceptance and settlement arrangements. **How many transactions per day can a UPI merchant accept?** No single universal daily transaction-count limit applies to every UPI merchant. Limits can apply to the payer’s transactions or amount, and individual banks and UPI apps may impose additional restrictions. Merchants may also have transaction-value, volume or risk limits under their bank or payment-provider agreement.