click here 👇
SEE DETAILS
Introduction
Digital payments in India have exploded in the last few years. From paying your vegetable vendor via UPI, recharging your phone using a wallet, or swiping a credit card at the mall, cash has almost disappeared from daily life.
It feels convenient, fast, and free. But here’s the truth most people don’t know—digital payments are not always free. There are hidden charges that eat into your money if you are not careful.
In this blog, we’ll break down the most common hidden charges in UPI, wallets, and credit cards, so you can avoid losing money silently.
click here 👇
SEE DETAILS
UPI: Free but Not Always
UPI (Google Pay, PhonePe, Paytm, etc.) is the most popular payment method in India. While RBI and NPCI have made UPI free for P2P transfers (person to person), there are still some hidden charges.
1. UPI Wallet to Bank Transfers
If you add money to Paytm/PhonePe wallet and then transfer it back to your bank account, there’s usually a 2–3% fee.
👉 Example: If you withdraw ₹10,000 from wallet to bank, you may lose ₹200–₹300 as fees.
2. Merchant Payments with Credit Cards via UPI
Some apps now allow credit card linking with UPI (like RuPay credit cards). While it looks cool, the interest and late fees work just like normal credit cards. Many people overspend thinking UPI + credit = free, but it’s not.
3. UPI Auto-Pay Charges
For subscriptions (OTT, insurance premiums, EMI payments), UPI Auto-Pay is convenient. But if the payment fails due to insufficient balance, some banks charge a penalty fee (₹50–₹200).
Wallets: Not as Free as They Seem
Digital wallets (Paytm, PhonePe, Amazon Pay, Mobikwik) are widely used, but they come with multiple hidden costs.
1. Adding Money with Credit Cards
Adding money to wallets using a credit card often carries a 2–3% fee.
👉 Example: Adding ₹5000 to Paytm wallet with a credit card may cost you an extra ₹100–₹150.
2. Merchant Charges
Some merchants (especially offline stores) pass on MDR (Merchant Discount Rate) to customers. That means you may end up paying 1–2% more if you pay via wallet.
3. Inactivity Fees
Some wallets deduct “maintenance charges” if your wallet stays inactive for too long. This is small (₹10–₹30), but it’s money lost for doing nothing.
Credit Cards: The King of Hidden Charges
Credit cards are powerful tools if used wisely—but they are also the biggest trap if you don’t read the fine print.
1. Annual Fees
Many credit cards advertise as “lifetime free” but later charge ₹500–₹2000 per year if minimum usage conditions are not met.
2. Late Payment Fees
Miss your due date? Expect late fees ranging from ₹200 to ₹1000, depending on your bill amount.
3. Interest Charges
If you don’t pay the full outstanding amount, the remaining balance attracts 3–4% monthly interest (36–48% per year). That’s higher than most personal loans!
👉 Example: Spend ₹20,000, pay only ₹5,000 → The remaining ₹15,000 starts growing with interest + GST.
4. Cash Withdrawal Fees
Withdrawing cash from an ATM using a credit card costs 2.5–3% of the amount withdrawn, plus interest from Day 1.
👉 ₹5000 withdrawn → ₹150 charge + daily interest until repayment.
5. Foreign Transaction Fees
Using your card abroad or on international websites? You’ll pay a 2–3.5% markup fee + GST.
6. Over-Limit Fees
Spend more than your credit limit? The bank will allow it but charge an over-limit fee (up to 2.5% of the exceeded amount).
7. EMI Conversion Charges
Converting big purchases into EMI sounds great, but there’s often a processing fee + interest hidden in fine print.
👉 A ₹50,000 phone bought on “0% EMI” may still cost extra due to GST on interest or processing fees.
Debit Cards: Not Always Free Either
We think debit cards are simple, but even they come with charges.
1. ATM Withdrawal Limits
Most banks allow 3–5 free withdrawals per month from other bank ATMs. After that, each withdrawal costs ₹20–₹25.
2. International Usage Fees
Using your debit card abroad? Banks charge 2–3% markup fees like credit cards.
3. SMS/Alert Charges
Some banks charge ₹15–₹25 per quarter for SMS alerts linked to debit card transactions.
Bank Transfers & Payment Gateways
Digital payments are not just UPI and cards—there are also NEFT, IMPS, RTGS, and payment gateway charges.
- IMPS Transfers: Some banks charge ₹5–₹15 per transfer above a certain amount.
- NEFT/RTGS: Usually free online, but offline branch transactions may cost ₹2–₹30.
- Payment Gateways (Razorpay, PayU, etc.): If you pay online with a card, merchants pay 2%–3% to the gateway. Sometimes this cost is passed on to you.
Why Do These Charges Exist?
Nothing is really free. Banks, wallets, and card companies spend on infrastructure, security, and operations. They make money through:
- Merchant fees (MDR)
- User charges (late fees, penalties)
- Interest on unpaid balances
- Convenience charges
👉 The problem is not the charges themselves, but the lack of transparency. Most users don’t even realize when they’re being charged.
How to Avoid These Hidden Charges
Now that you know the traps, here’s how to save money:
✅ For UPI:
- Don’t load wallets with credit cards.
- Avoid wallet-to-bank transfers.
- Keep enough balance for auto-pay to avoid penalties.
✅ For Wallets:
- Use UPI linked directly to your bank instead of wallets.
- Don’t keep large idle balances.
- Avoid wallet recharges via credit card.
✅ For Credit Cards:
- Always pay the full bill on time.
- Avoid cash withdrawals.
- Check if your card is truly lifetime free.
- Compare forex cards vs. credit cards for international use.
✅ For Debit Cards & Bank Transfers:
- Use your own bank’s ATM to avoid charges.
- Prefer online NEFT/IMPS over offline branch payments.
- Check quarterly bank statements for hidden deductions.
Case Study: How Rohan Lost Money Silently
Rohan, a young professional in Mumbai, thought all his payments were “free.” In one month:
- Loaded ₹10,000 to Paytm wallet via credit card → lost ₹250.
- Missed credit card due date → late fee ₹500 + interest.
- Withdrew cash from credit card → another ₹300.
- Exceeded ATM withdrawals → ₹75 gone.
👉 In total, Rohan lost over ₹1100 in hidden charges without even realizing.
FAQs
Q1. Is UPI completely free in India?
👉 For individuals, yes (bank-to-bank transfers). But wallet transfers and credit card links can have charges.
Q2. Why do wallets charge for bank transfers?
👉 Because wallets treat it like a “cash advance,” which costs them money.
Q3. Can I avoid all credit card charges?
👉 Yes—if you always pay in full, avoid cash withdrawals, and use the right card for your needs.
Q4. Are there really “zero charge” cards or wallets?
👉 Some fintechs advertise no fees, but read terms carefully. There’s always fine print.
Final Thoughts
Digital payments are here to stay. They make life easier, safer, and faster. But the illusion of “free” often hides costs that slowly eat into your money.
👉 The key is awareness. Always read the fine print, check your bank/wallet statements, and choose payment methods wisely.
Remember: Convenience is good, but not at the cost of losing money silently.