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How to Use UPI in Nepal and Bhutan
Indian travellers crossing into Nepal or Bhutan used to face a familiar headache: currency exchange counters with poor rates, ATMs that charged steep withdrawal fees, and the constant worry of carrying too much cash. UPI has changed that. Since the NPCI rolled out cross-border UPI acceptance in both countries, you can now pay at thousands of shops, hotels, and restaurants by simply scanning a QR code. But the service works differently from domestic UPI. There are transaction caps, specific merchant networks, and a few pitfalls that catch first-time users off guard. This guide covers everything you need to know before your next trip.
How Cross-Border UPI Actually Works
Domestic UPI moves money between two Indian bank accounts in real time. Cross-border UPI keeps the same scan-and-pay experience on your end, but the settlement is handled differently behind the scenes. When you scan a Nepali or Bhutanese merchant's QR code, the transaction is routed through NPCI International (NIPL) and a local payment partner. In Nepal, that partner is Gateway Payments Service (a subsidiary of Nepal's Fonepay network). In Bhutan, the Royal Monetary Authority facilitates settlement through the Bhutan National Bank network.
Your Indian bank account is debited in INR. The merchant receives the equivalent amount in NPR (NPR) or Bhutanese Ngultrum (BTN) at the prevailing exchange rate. You do not need to hold foreign currency, open a new account, or download a separate app. Your existing UPI app (PhonePe, Google Pay, Paytm, BHIM, or any bank app) works as-is.
Where You Can Pay with UPI in Nepal and Bhutan
UPI acceptance is concentrated in tourist corridors and urban centres. In Nepal, coverage is strongest in Kathmandu, Pokhara, and Lumbini. Most hotels rated three stars and above, large restaurants, and retail chains accept UPI. Smaller tea houses on trekking routes generally do not. In Bhutan, Thimphu and Paro have the widest acceptance, especially at government-approved hotels and licensed tour operators.
Look for QR codes carrying the NEPALPAY or BHIM logo at the checkout counter. Not every QR code you see will be UPI-compatible. Some merchants display QR codes for local wallets like eSewa or mBOB that do not interoperate with Indian UPI apps. If your app throws an error after scanning, that is likely the reason.
Transaction Limits and Charges
Cross-border UPI transactions have separate limits from your domestic UPI cap. Here is how the numbers break down as of mid-2026.
| Parameter | Nepal | Bhutan |
|---|---|---|
| Per-transaction limit | Rs. 10,000 | Rs. 10,000 |
| Daily cumulative limit | Rs. 50,000 | Rs. 50,000 |
| Transaction fee to user | Nil | Nil |
| Exchange rate markup | ~1-1.5% over mid-market | Pegged 1:1 (INR=BTN) |
| Merchant settlement currency | NPR | BTN |
Bhutan's Ngultrum is pegged at par with the INR, so there is no currency conversion loss. Nepal's rate carries a small markup, but it is still significantly cheaper than airport currency exchange counters, which typically charge 3-5% spreads. No fee is charged to you as a user. The merchant bears a small interchange, similar to how domestic UPI merchant transactions work.
Step-by-Step: Paying with UPI in Nepal or Bhutan
1. Open your UPI app on your phone. Make sure you have mobile data or Wi-Fi. Roaming data plans from Jio, Airtel, and Vi work in both countries, though speeds can be patchy in rural Nepal.
2. Scan the merchant's QR code. Your app will detect that it is a cross-border transaction and may show a brief confirmation screen with the merchant's name and the INR amount.
3. Verify the amount displayed in INR. For Nepal, the conversion from NPR happens automatically. For Bhutan, the amount is 1:1.
4. Enter your UPI PIN to authorize. The transaction typically completes in 5-15 seconds, slightly slower than domestic payments because of the additional routing hop.
5. Save the confirmation screen. Take a screenshot. Unlike domestic UPI where your bank statement updates instantly, cross-border transactions can take a few hours to reflect in your passbook.
Common Issues and How to Fix Them
The most frequent complaint from travellers is "transaction declined" errors. In most cases, the issue is not with UPI itself but with your bank's international transaction settings. Some banks disable cross-border UPI by default. You may need to enable "international transactions" or "overseas UPI" in your net banking or mobile banking settings before departure.
Another common problem is scanning an incompatible QR code. If you scan a local wallet's QR (eSewa in Nepal, mBOB in Bhutan), your UPI app will not recognize it. Ask the merchant specifically for the "Indian UPI" or "NEPALPAY" QR code. Many merchants keep two or three QR codes at the counter for different payment systems.
Network connectivity matters more abroad. A dropped connection mid-transaction can leave you unsure whether the payment went through. If this happens, wait two minutes before retrying. Check your UPI app's transaction history. If the amount was debited but the merchant says it was not received, the money will auto-reverse within 48 hours per RBI guidelines.
Tax and Compliance: What Travellers Should Know
Cross-border UPI payments fall under the Liberalised Remittance Scheme (LRS) monitored by the RBI. However, the current per-transaction and daily limits are well below the LRS threshold of USD 250,000 per financial year, so most leisure travellers will never trigger compliance requirements. You do not need to file any separate declaration for routine spending.
For business travellers making repeated high-value transactions, it is worth noting that your bank tracks cumulative cross-border UPI volume. If your total outward remittances (including UPI) exceed Rs. 7 lakh in a financial year, Tax Collected at Source (TCS) of 5% applies on the amount above Rs. 7 lakh. This TCS is adjustable against your income tax liability, so it is not an additional cost, just an advance tax collection.
If you are setting up UPI before your trip, Stashfin's UPI Money Transfer feature makes it straightforward. You can scan and pay any merchant QR code, send money to a mobile number or UPI ID, or move funds to your own bank account, all through bank-to-bank UPI rails. Having a reliable UPI setup on your phone before you land in Kathmandu or Paro saves you the hassle of hunting for currency exchange on arrival.
Key Takeaways
UPI works at merchant outlets in Nepal and Bhutan via NPCI International's cross-border network. No new app needed.
Per-transaction limit is Rs. 10,000 with a daily cap of Rs. 50,000. No fee is charged to the user.
Bhutan's currency is pegged 1:1 with INR, so there is zero conversion loss. Nepal's rate carries a small markup of about 1-1.5%.
Enable international/overseas UPI in your bank settings before departure to avoid declined transactions.
Always scan the UPI-compatible QR code at the counter, not local wallet QR codes like eSewa or mBOB.
Cross-border UPI falls under LRS but routine tourist spending stays well below reporting thresholds.
