diff --git a/backend/src/services/phonepe-transaction-sync-service.js b/backend/src/services/phonepe-transaction-sync-service.js
index d822763..6538f44 100644
--- a/backend/src/services/phonepe-transaction-sync-service.js
+++ b/backend/src/services/phonepe-transaction-sync-service.js
@@ -32,6 +32,18 @@ class PhonePeTransactionSyncService {
    * Fetch transactions from PhonePe for a date range
    */
   async fetchTransactions(startDate, endDate) {
+    // Check if PhonePe Gateway is configured
+    if (this.merchantId === 'YOUR_MERCHANT_ID' || !this.merchantId || this.merchantId.length < 5) {
+      console.log('ℹ️ [PhonePe Sync] PhonePe Gateway not configured - using Direct UPI instead');
+      console.log('ℹ️ [PhonePe Sync] For Direct UPI payments, use the webhook-based reconciliation');
+      return {
+        success: true,
+        transactions: [],
+        message: 'PhonePe Gateway not configured. Using Direct UPI payment system.',
+        usingDirectUPI: true,
+      };
+    }
+
     try {
       const payload = {
         merchantId: this.merchantId,
@@ -212,6 +224,23 @@ class PhonePeTransactionSyncService {
       // Fetch transactions from PhonePe
       const result = await this.fetchTransactions(startDate, endDate);
 
+      // If using Direct UPI (no PhonePe Gateway configured)
+      if (result.usingDirectUPI) {
+        console.log('ℹ️ [PhonePe Sync] Using Direct UPI - No gateway sync needed');
+        return {
+          success: true,
+          message: 'Direct UPI payment system active. Payments auto-detected via webhooks.',
+          results: {
+            total: 0,
+            matched: 0,
+            autoRecorded: 0,
+            needsReview: 0,
+            failed: 0,
+            usingDirectUPI: true,
+          },
+        };
+      }
+
       if (!result.success) {
         return {
           success: false,
@@ -309,6 +338,17 @@ class PhonePeTransactionSyncService {
 
       const result = await this.fetchTransactions(startDate, endDate);
 
+      // If using Direct UPI
+      if (result.usingDirectUPI) {
+        console.log('ℹ️ [PhonePe Sync] Direct UPI active - no review queue needed');
+        return {
+          success: true,
+          reviewQueue: [],
+          count: 0,
+          message: 'Using Direct UPI - payments auto-detected via webhooks',
+        };
+      }
+
       if (!result.success) {
         return { success: false, message: result.message };
       }
diff --git a/luckychit/lib/interfaces/manager/transaction_sync_dialog.dart b/luckychit/lib/interfaces/manager/transaction_sync_dialog.dart
index d7c5384..cbd6df6 100644
--- a/luckychit/lib/interfaces/manager/transaction_sync_dialog.dart
+++ b/luckychit/lib/interfaces/manager/transaction_sync_dialog.dart
@@ -720,13 +720,60 @@ class _TransactionSyncDialogState extends State<TransactionSyncDialog> {
             ),
             SizedBox(height: 8.h),
             Text(
-              'No transactions need review.\nTap "Sync Transactions" to check for new payments.',
+              'No transactions need review.',
               textAlign: TextAlign.center,
               style: TextStyle(
                 fontSize: 14.sp,
                 color: Colors.grey.shade600,
               ),
             ),
+            SizedBox(height: 16.h),
+            Container(
+              padding: EdgeInsets.all(16.w),
+              decoration: BoxDecoration(
+                color: Colors.blue.shade50,
+                borderRadius: BorderRadius.circular(12.r),
+                border: Border.all(color: Colors.blue.shade200),
+              ),
+              child: Column(
+                children: [
+                  Icon(
+                    Icons.qr_code_2,
+                    size: 32.w,
+                    color: Colors.blue.shade600,
+                  ),
+                  SizedBox(height: 12.h),
+                  Text(
+                    'Using Direct UPI Payments',
+                    style: TextStyle(
+                      fontSize: 14.sp,
+                      fontWeight: FontWeight.w600,
+                      color: Colors.blue.shade900,
+                    ),
+                  ),
+                  SizedBox(height: 8.h),
+                  Text(
+                    'Payments are automatically detected when members pay via UPI QR codes.',
+                    textAlign: TextAlign.center,
+                    style: TextStyle(
+                      fontSize: 12.sp,
+                      color: Colors.blue.shade700,
+                      height: 1.4,
+                    ),
+                  ),
+                  SizedBox(height: 8.h),
+                  Text(
+                    '• 0% transaction fees\n• Instant auto-detection\n• Works with any UPI app',
+                    textAlign: TextAlign.center,
+                    style: TextStyle(
+                      fontSize: 11.sp,
+                      color: Colors.blue.shade600,
+                      height: 1.5,
+                    ),
+                  ),
+                ],
+              ),
+            ),
           ],
         ),
       ),