UPI is now accepted in 11 countries, but Indian travelers should be careful of extra costs. Currency conversion fees of up to 3.5% and a 2% TCS on tour packages can increase total travel expenses. Financial experts suggest using UPI as a secondary payment method, while keeping credit or forex cards as a primary option to manage transaction limits and potential settlement delays.
The convenience of using UPI for payments while traveling internationally is growing, with the service now active in 11 countries including the UAE, Singapore, France, Mauritius, Nepal, Bhutan, Qatar, Sri Lanka, Cambodia, and Greece. While the ability to scan a local QR code at an international shop feels familiar, travelers should be aware of the actual financial impact before they rely on it for their entire trip.
Unlike the free domestic UPI experience, international transactions come with added costs. Banks and payment apps often apply a currency conversion markup ranging from 1.5% to 3.5% above the market exchange rate. This means that for significant expenses like hotel stays or luxury goods, you might end up paying more than you would if you used a specialized forex card or a credit card with lower international transaction fees. It is essential to check the final amount in Indian Rupees displayed on your app before confirming any payment to understand the exact exchange rate being applied.
There are also specific operational limits to consider. You must manually activate the 'UPI International' feature in your preferred app, such as Google Pay or PhonePe, before leaving India. This activation is typically valid for 90 days, after which it resets. Additionally, there is generally a limit of Rs 1 lakh per transaction, although individual banks may set their own, more restrictive thresholds.
Travelers should also stay updated on tax implications. Under the Liberalised Remittance Scheme, a 2% Tax Collected at Source (TCS) is applicable on overseas tour packages. This tax applies regardless of the transaction size and is a factor that can influence your overall travel budget.
From a risk perspective, relying solely on a smartphone is not recommended. International merchant integration is not yet as widespread as in India, and because these payments involve cross-border settlement, failed transactions can lead to longer resolution times compared to local usage. Financial planners often suggest that travelers carry physical credit cards or forex cards as their primary payment source. Furthermore, it is a recommended security practice to deactivate international UPI features on your app immediately after returning to India to minimize the risk of unauthorized transactions.