Hidden UPI mandates: Here’s why a ₹1 trial can cost far more over time | Personal Finance

A Rs 1 or Rs 2 payment for a free trial may appear insignificant, but for many users it can become the beginning of recurring monthly deductions they never intended to keep.

The deductions are not necessarily fraudulent. In most cases, they are technically authorised because users had approved the recurring payment earlier. The problem, experts say, is that many consumers either fail to notice what they are consenting to or simply forget about the mandate later.

How a Rs 1 trial turns into a monthly subscription

The process usually begins when a user signs up for a promotional offer.

Saikrishna Musunuru, whole-time director and chief executive officer at Payinstacard, explains this through a typical example.

Suppose a customer signs up for a three-month music streaming trial costing Rs 1. During checkout, the user selects UPI as the payment method and enters the UPI ID. Before completing the transaction, the UPI application displays an AutoPay mandate authorisation screen showing the merchant’s name, the maximum amount that can be deducted, the payment frequency and the validity of the mandate.

“The details of the recurring payments are displayed, but many users do not realise they are also approving future deductions. The screen looks like a regular payment confirmation screen, not a recurring payment agreement,” Musunuru said.

Once the trial period ends, the subscription renews automatically and the recurring amount is deducted from the linked bank account.

According to Musunuru, this is largely an awareness issue rather than a flaw in the payment system.

Are these deductions actually authorised?

Many consumers assume that if they did not manually approve the monthly debit, the deduction must be unauthorised. However, experts say that is not how UPI AutoPay works.

Musunuru said transparency is a shared responsibility between merchants, UPI applications and banks.

Merchants should clearly disclose that the subscription will renew automatically, how much will be charged and how often. UPI applications should prominently display the mandate details before users enter their UPI PIN, while banks execute recurring debits only after the customer has approved the mandate.

“From a payments perspective, these recurring deductions are usually considered authorised because customers agreed to them when they signed up. Forgetting about the subscription later does not cancel that agreement,” Musunuru said.

However, he added that legal compliance alone is not enough. Customers should receive adequate information before the mandate is created, timely notifications before recurring debits and a simple process to manage or cancel subscriptions.

Anand Kumar Bajaj, founder, managing director and chief executive officer at PayNearby, echoed a similar view.

“Recurring payments work well when consent is clear, visible and easy to manage. The amount, frequency, validity and cancellation option must be shown upfront in a manner that the customer can understand before approval,” Bajaj said.

Small deductions can quietly affect household finances

While a single Rs 199 or Rs 299 deduction may not appear significant, multiple forgotten subscriptions can gradually strain monthly cash flow.

Musunuru said he has observed cases where consumers had several active subscriptions for entertainment, productivity software and digital services running simultaneously without realising it.

In one representative case, six recurring subscriptions were deducted around the same time, reducing the account balance shortly before an EMI payment was due. Although none of the individual charges was large, together they created a temporary cash-flow problem and delayed the EMI until additional funds were deposited.

“The issue is not that UPI AutoPay is unsafe. It is a secure payment method. The real problem is that people often do not keep track of money leaving their accounts regularly,” Musunuru said.

For households that operate on tight monthly budgets, even a handful of forgotten subscriptions can disrupt planned spending or reduce the balance available for essential payments.

How users can protect themselves

Experts recommend treating recurring digital payments the same way as any other regular financial commitment.

According to Musunuru and Bajaj, users should:

• 
  Review active UPI mandates at least once every month.
• 
  Keep SMS and app notifications enabled for all recurring debits.
• 
  Cancel subscriptions that are no longer required instead of simply uninstalling the app.

Consider using a separate bank account for entertainment and digital subscriptions to prevent recurring charges from affecting household expenses.

Review monthly bank statements carefully, including small recurring debits that may otherwise go unnoticed.

Bajaj said digital payments have made recurring transactions convenient, but financial discipline remains equally important.

“Customers should review active mandates every month, keep payment alerts switched on, cancel unused subscriptions and avoid linking too many recurring payments to their primary household account. Digital convenience must always go hand in hand with everyday financial awareness,” he said.

For consumers, spending just a few minutes each month reviewing active UPI mandates could prevent hundreds or even thousands of rupees from quietly leaving their bank account over the course of a year.