School Fee Payments: In today’s digital age, making online payments has become convenient; consequently, many parents use UPI, debit cards, or credit cards to pay school fees. Under the latest UPI guidelines, additional charges may apply when making online payments. Some schools or payment gateways impose a “convenience fee” when they process fee payments, which increases the total amount due.
Given these changes, many are wondering which payment method—UPI, debit card, or credit card—is the most cost-effective for paying school fees. UPI has clarified the issue on its social media platform, X (formerly Twitter). While the merchant typically bears the Merchant Discount Rate (MDR), in certain circumstances, the parents may incur a convenience fee.
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Charges on School Fee Payments via UPI
Paying school fees via UPI is quite straightforward, as it allows parents to transfer funds directly from their bank accounts to the school’s account. According to the new rules effective from October 15, no MDR is levied on merchant payments of up to ₹2,000. For merchant payments exceeding ₹2,000, an MDR of 0.4% is applicable. Furthermore, for payments of ₹75,000 or more, an MDR charge of ₹300 will be applied.
Payments via Debit Card
When paying with a debit card, the funds are deducted directly from the user’s bank account. Schools must pay a fee to their payment service provider to accept card-based payments. The merchant fee for debit card transactions varies depending on the card network and the bank; reports indicate a rate of 0.90% for such transactions. Notably, a “zero MDR” policy applies to RuPay debit card transactions.
Additional charges for paying school fees via credit card
It should be noted that when school fees are paid using a credit card, the amount is not deducted directly from a bank account; instead, it is added to the credit card bill. Platforms facilitating such payments charge parents an additional convenience fee—ranging from 2% to 2.5% of the total amount, which translates to an extra cost of ₹2,000 to ₹2,500. Furthermore, failure to pay the credit card bill on time may also attract interest charges.