UPI Credit Card Charges, Limits & New RBI 2026 Rules — Everything Explained
Are there charges for using your credit card on UPI? What are the new RBI 2026 rules on 2FA and MDR? This plain-language guide answers every question on cred...
More Indians are linking their RuPay credit cards to PhonePe and Google Pay every month — and the first question almost everyone asks is the same: are there any extra charges? Will I be paying more for using credit on UPI?
The short answer is no — you as the cardholder pay nothing extra. But the slightly longer answer involves understanding the MDR structure, the new RBI 2FA mandate from April 2026, and the daily transaction limits your bank sets. This guide covers all of it.
Bottom line upfront: Using a RuPay credit card on UPI costs you nothing extra as a consumer. The merchant may pay a small MDR on transactions above Rs 2,000, but this is invisible to you. You pay only the transaction amount — nothing more.
Are There Any Charges for Using Credit Card on UPI?
For you, the cardholder: No. You pay exactly the amount shown on the merchant's payment request — not a single rupee more.
The MDR (Merchant Discount Rate) — the small fee that covers the cost of processing a card payment — is paid by the merchant to their acquiring bank. NPCI and RBI have set UPI credit card MDR at:
| Transaction Amount | MDR (Merchant Pays) |
|---|---|
| Up to Rs 2,000 | Zero MDR — completely free for both cardholder and merchant |
| Above Rs 2,000 | MDR applies (typically 0.5% to 2% depending on merchant category — paid by merchant, not you |
| Government payments | Zero MDR regardless of amount |
| Utilities (electricity, water, gas) | Zero or very low MDR |
The key practical implication: for daily transactions at kirana stores, autos, small restaurants, and most local merchants (where the typical bill is under Rs 2,000), there is genuinely zero cost to anyone. For larger purchases at malls or restaurants, the merchant pays a small fee — but you do not.
The New RBI 2FA Rule — April 2026 Update
Effective April 1, 2026, the Reserve Bank of India implemented mandatory two-factor authentication (2FA) for all digital payment transactions under the 'Authentication Mechanisms for Digital Payment Transactions Directions, 2025.'
What this means practically for UPI credit card users:
Every UPI credit card transaction above a certain threshold (typically Rs 5,000) requires a second factor of authentication — not just your UPI PIN
For most transactions, this means an OTP in addition to your UPI PIN
Recurring mandates on credit cards also require explicit pre-approval with 2FA
One-click payment shortcuts that skip authentication are being phased out
| Transaction Type | Authentication Required (April 2026) |
|---|---|
| UPI QR payment under Rs 5,000 | Standard UPI PIN (unchanged for most banks) |
| UPI QR payment above Rs 5,000 | UPI PIN + additional factor (OTP) at some banks |
| Recurring mandate on credit card | Prior approval with 2FA + pre-debit notification 24h before |
| International online payment | 2FA mandatory — OTP + any device-based factor |
| Contactless tap (PoS) | PIN for transactions above Rs 5,000 (unchanged) |
The 2FA rule primarily affects recurring payments and large one-time transactions. For your daily Rs 300 grocery scan at Zepto, nothing changes. The impact is felt when you set up new recurring mandates or make large single payments above Rs 5,000 via UPI.
Daily and Monthly Transaction Limits for Credit Card on UPI
Each bank sets its own limits for RuPay credit card transactions via UPI. These are separate from your credit card's overall credit limit. Bank-wise typical limits:
| Bank | Typical Daily UPI Credit Card Limit |
|---|---|
| HDFC Bank | Rs 1,00,000 per day |
| SBI | Rs 1,00,000 per day |
| ICICI Bank | Rs 1,00,000 per day |
| Axis Bank | Rs 1,00,000 per day |
| Federal Bank (Scapia) | Rs 1,00,000 per day |
| IDFC FIRST Bank | Rs 1,00,000 per day |
| New/Fintech banks | May be lower initially — check with your specific bank |
Note: The Rs 1 lakh daily UPI limit is the UPI network limit — not specific to credit cards. Some banks set lower limits for new UPI credit card linkages that may increase after 30 to 90 days of usage.
Do You Earn Credit Card Rewards When Paying via UPI?
This depends entirely on your specific credit card. There is no universal rule.
Some cards reward UPI transactions at the same rate as online transactions — Tata Neu Infinity (1.5% on non-Tata UPI), BOBCARD Eterna (3.75% on online + UPI)
Some cards reward UPI at a lower rate — SBI SimplyCLICK earns less on UPI than on specific partner sites
Some cards exclude UPI from rewards entirely — check your card's MITC under 'excluded transaction types'
Related reading: Best Credit Card for UPI Payments.
Kiwi Credit Card is specifically designed for UPI — 2% flat on all UPI QR payments
Before assuming you will earn full rewards on UPI payments, look up your card's terms document and search for 'UPI' or 'Merchant Category Code' or 'government' in the exclusions section.
Which UPI Apps Support RuPay Credit Card Payments?
Related reading: RuPay vs Visa vs Mastercard.
| UPI App | RuPay Credit Card Support |
|---|---|
| PhonePe | Full support — most banks |
| Google Pay | Full support — most banks |
| Paytm | Partial support — limited bank coverage |
| BHIM | Support available — varies by bank |
| Bank-specific UPI apps | Usually supports only that bank's cards |
| Cred Pay (via UPI) | Limited — check current status |
How the Credit Billing Works for UPI Transactions
When you pay via UPI using your RuPay credit card, the transaction is charged to your credit card account — exactly like an online or in-store card swipe. It appears on your monthly credit card statement. You pay it on your due date. The 45 to 55 day interest-free period applies.
Your bank account is not touched. Your UPI transaction history may show the payment, but the underlying debit is from your credit card, not your savings account.
What Happens If a UPI Credit Card Payment Fails?
If a UPI credit card payment fails mid-transaction, the amount may be debited from your credit card but not received by the merchant. Standard dispute process:
Wait 24 to 48 hours — most failed UPI transactions auto-reverse within 24 hours
If not reversed, check your credit card statement — if debited, raise a dispute via your bank's app
NPCI mandates reversal within T+1 working day for failed UPI transactions
For credit card specifically, the bank processes the reversal within 5 to 7 working days after confirming failure
Frequently Asked Questions
Q: Can I use a Visa credit card on UPI?
No. As of May 2026, only RuPay network credit cards can be linked to UPI apps. Visa and Mastercard credit cards cannot be used for UPI credit payments.
Q: Does linking my credit card to UPI affect my credit limit?
No — linking itself does not affect your limit. Each transaction you make via UPI debits your credit card and reduces your available limit, just like any other transaction.
Q: Can I send money to someone (P2P transfer) using my credit card on UPI?
No. UPI credit card payments only work for P2M (person-to-merchant) transactions — payments to merchants with a registered UPI QR. P2P money transfers (sending money to a friend's UPI ID) are not allowed via credit card on UPI.
Q: Is there a minimum transaction amount for UPI credit card payments?
No minimum amount is set by NPCI. But individual banks may set their own minimums. Most banks allow from Re 1.
See also: UPI Credit Card Explained.