February 18, 2025 · 13 mins read
Santosh Kumar
The Unified Payments Interface (UPI) has become revolutionary in Indian digital transactions and an instant mode for millions to settle payments online hassle-free without card and cash since it was released to the general public by the National Payment Corporation of India (NPCI) back in 2016. Making real-time payments has lifted its scale due to the convenience offered.
As digital payment systems spread rapidly worldwide, users have often wondered if UPI, specifically UPI QR codes, can be used to make international transactions. This article will explain the mechanics of UPI, its reach, the technical and regulatory issues of using UPI QR codes across borders, and the future of cross-border UPI payments.
UPI stands for Unified Payment Interface. UPI is instant real-time money transfer through bank accounts via an application on one's mobile device. It omits the step of filling in lengthy bank details for a smooth experience of transactions. It is used for these purposes:
1: Virtual Payment Addresses (VPAs).
2: UPI IDs associated with bank accounts
3: QR codes for direct payments
A UPI (Unified Payments Interface) QR code is a two-dimensional bar code that can be used for instant digital payments by linking directly to a merchant or a particular individual's UPI ID or bank account. For instance, without typing in account details or phone numbers, a user can execute a payment with just a QR code scan, making the transaction quicker and less vulnerable.
QR Code Creation: A retailer or a user creates a QR code through their UPI-enabled application, be it Google Pay, PhonePe, Paytm, or BHIM. That QR code is associated with their bank account or UPI ID.
QR Code Scan: The payer scans the QR code using his or her UPI application, and the payment information is automatically pulled.
Payment Authorization: The transaction amount is auto-filled for dynamic QR codes or entered manually by the payer for static QR codes. The user then authenticates the transaction by inputting the UPI PIN.
Instant Fund Transfer: As soon as the PIN is entered, the payment is processed in real-time and reflects the transfer of money from the payee's bank account to that of the receiver. In the process, both parties get instant payment confirmation.
Static QR Code: This is a fixed QR code linked to a specific bank account. Small-scale businesses, street vendors, and individuals commonly use it. In this case, the payer needs to enter the amount for payment himself.
Dynamic QR Code: This is a QR code generated for every transaction with a predefined amount. It is mostly utilized by big retail chains, e-commerce websites, and online service providers, where payments are processed without mistakes.
1: Contactless and Cashless Payments - There is no need for cash or swiping the card, so dependency on the ATM is decreased.
2: Fast and Easy - It processes the payments instantly with the least effort, hence making the process smooth.
3: No extra hardware is needed as QR codes are not expensive like PoS (Point of Sale) machines.
4: It is highly secure, as transactions through UPI are authenticated using two-factor authentication (2FA), which includes the UPI PIN.
5: It has been used by millions of businesses, restaurants, street vendors, and online stores in India.
International transactions that are done on UPI usually involve the facility to make payments or transfer funds to foreign merchants, businesses, or individuals in a different country. Now that UPI has arrived in international markets, users can transact without going through traditional systems like wire transfers, SWIFT payments, and even credit/debit card payments, which sometimes take longer hours and come with higher costs. It would allow the use of UPI for international transactions, giving users access to fast, secure, and low-cost alternatives to pay or transfer money across borders.
The original design of UPI was intended for domestic use; however, the National Payments Corporation of India (NPCI), which designed UPI, made a great deal of effort to expand its utility to cross-border payments. This is being achieved through collaborations and partnerships with international payment networks and local financial institutions.
UPI payments can now be made for international transactions in Bhutan, Nepal, UAE, Singapore, Mauritius, and Sri Lanka. However, this will improve with time as more agreements are made and integrated systems are put in place. Such international transactions through UPI enable Indian users to pay at foreign merchant outlets using the UPI QR code or even send money to a foreign bank account, all from their UPI-enabled mobile applications like Google Pay, PhonePe, or Paytm.
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For an international transaction to occur in UPI, it has to be aligned with a foreign country's payment gateway. Let's break this international UPI transaction step-by-step:
Enable International UPI in your account using the app setting of either banking or the UPI application
Scan a QR code by an international merchant which supports UPI payments.
Payment in Local Currency: The transaction amount shows up in local currency.
Currency Conversion: An Equivalent amount is converted into INR, and then the converted amount is deducted from the user's Indian bank account.
Transaction Processing: Since it passes through a foreign payment network or NPCI partner bank, it automatically follows all the regulations.
Payment Confirmation: Instant payment confirmation to the payer as well as merchant.
Yes, Indian customers can now make overseas UPI payments by scanning a QR code at selected stores in those specific countries. You first need to turn the international payment switch on in UPI apps that support international payments, such as PhonePe, Google Pay, and the Bhim UPI app.
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While UPI transfers within India are free, the convenience of international payments through UPI comes at a cost. When you're using UPI for payments abroad, you essentially make an international transfer from your bank.
So, while apps like Google Pay or PhonePe do not charge a fee for UPI International, the cost comes from the international transfer fee associated with your bank.
In addition to your bank's international transfer fee, another cost you have to watch out for is a markup on the exchange rate when converting INR to foreign currency. The banks convert currencies at forex rates that are higher than the mid-market rate.
So, while the UPI transfer can be an alternative to making payments abroad, you will have to be cautious of the international transfer fee and currency exchange rate so that there are no shocks when you are making a payment abroad.
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Travelling abroad means paying for international business by scanning a QR code, as explained above, using UPI International. However, this provision is not for outward remittances from India. As of now, sending money out of India through UPI is not available for consumers, but it will be very soon. The government has also announced linking India's UPI with real-time payment systems of other countries, such as Singapore and UAE. So, let's stay tuned for updates about sending international transfers from India with UPI!
You will also need to search for alternatives to send money abroad. When comparing providers, ensure that you check for any hidden fees and markups on the exchange rate.
Residents of India can get a payment from any other country around the world to their UPI address directly. You will need to share your VPA (UPI's Virtual Private Address) with the sender abroad and ask them to initiate a money transfer application that supports payments to UPI account holders in India.
Some of the most popular applications that support payment to UPI accounts in India are:
1: Western Union
2: Remitly
3: Xoom
4: Wise
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Detailed Step-by-Step Explanation of How UPI QR Code Payments Work:
The merchant generates the QR code through a UPI-enabled payment app, such as Google Pay, PhonePe, Paytm, BHIM UPI, or any bank-provided payment solution. This QR code is connected directly to the merchant's UPI ID or bank account for instant payments.
QR codes are available for payments across the board in retail stores, e-commerce platforms, restaurants, fuel stations, and street vendors to make them even more accessible.
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The payer (customer) scans the merchant’s UPI QR code using a UPI-enabled mobile app such as Google Pay, PhonePe, Paytm, Amazon Pay, or a banking app. This scanning process instantly retrieves the merchant’s payment details, reducing the chances of human error compared to manually entering UPI IDs or phone numbers.
If the QR code is static, then the user must enter the payment amount. If the QR code is dynamic, then the merchant system will automatically fill the transaction amount. The app then shows the name of the merchant and the UPI ID so that the payer can authenticate the recipient before the transaction is completed.
After confirming the payment details, the payer authorizes the transaction by entering their UPI PIN. This two-factor authentication (2FA) adds security, protecting against unauthorized transactions. Biometric authentication might be required as an additional form of security, such as face ID while using some apps enabled with UPI.
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Following the entry of the UPI PIN, it sends the request for payment and deducts money from the respective bank account directly linked to it. The transaction is processed through NPCI's UPI network. Funds are settled immediately in the merchant's account. Instant confirmation of payment is sent to both the payer and the merchant through SMS and app notifications.
Before sending international transactions, the user must turn on UPI International through their UPI-enabled banking app (for example, Google Pay, PhonePe, Paytm, or a bank's UPI app). Some banks enable international UPI payments automatically, while others require users to turn on the feature in their mobile banking app manually. This activation process would include security checks, such as OTP verification or additional authentication, to ensure the user accepts international payments.
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1: When activated, UPI International allows a user to scan an international QR code at a participating foreign merchant, such as a retail store, hotel, or restaurant that supports UPI transactions.
2: Such merchants display UPI-compatible QR codes and are integrated with local payment networks, such as NETS in Singapore, Liquid Group in UAE, and LankaPay in Sri Lanka.
3: The user scans the QR code, just as he would for a domestic transaction using his UPI app.
1: After scanning, the UPI app fetches the transaction details, including the merchant's name and the amount payable in local currency, say AED in UAE, SGD in Singapore, or LKR in Sri Lanka.
2: The user can verify the amount and continue with the transaction.
3: If the merchant utilizes a dynamic QR code, the exact amount is already prefilled. In a static QR code, the user must fill in the amount.
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1: International UPI payments differ from domestic payments as the payment is in local foreign currency, and the user's bank account is in Indian Rupees (INR).
2: As soon as the transaction is triggered:
3: The UPI system will calculate the rate of exchange of INR and the local currency, for example, INR to AED for UAE.
4: The amount is shown in INR to the user before finalizing the payment.
5: The rates are determined using the real-time market rate, and the bank or the payment processor might charge a minimal conversion fee.
6: This process ensures that the foreign merchant receives the exact amount in their local currency while the payer is charged the equivalent amount in INR.
1: The user authorizes the transaction by entering their UPI PIN or using biometric authentication (fingerprint or face ID).
2: Once authorized, the payment is processed through the NPCI’s UPI system, which works with the foreign payment network to complete the transaction.
3: The funds are directly debited from the user's Indian bank account, and the payment reaches the merchant in their local currency. Instant confirmation of both the payer and the merchant through their respective UPI/payment apps.
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Hence, the question, "Can I use a UPI QR code for international transactions?" is answered above. Users can use a UPI QR code for international transactions; however, utmost care should be taken to ensure secure transactions. Since more countries will be adopting UPI, international usability is expected to increase, making it an easy medium for travellers and companies to use conveniently. Yet, its availability is not widespread, so one needs to check compatibility before depending on it overseas.
Can I use the UPI QR code for international transactions?
You can use UPI International to pay for international businesses by scanning a QR code.
What is the transfer fee in UPI transactions?
The transfer fee is the transaction cost; it depends on the amount sent and where it goes.
What is the UPI transaction limit for international transactions?
The official limit on UPI transfers is up to INR 2,00,000 in one transfer. Note that the actual limit may depend less on the app you use to make the transfers.
How much time does a UPI transfer take?
The time it takes to transfer money via UPI depends on the platform you are using. Domestic transfers are immediate, but international transfers can take longer.
What is the exchange rate fee for international transfers?
Banks use the mid-market exchange rate, which is the pure exchange rate without a markup. However, some providers may use a weaker exchange rate and charge a fee for the difference.
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