UPI Fee From October 15: Who Pays and Why Customers Remain Exempt
UPI Fee From October 15: Who Pays and Why Customers Remain Exempt
New Delhi, September 16: Customers will continue to make UPI payments without an additional transaction fee when a new merchant charging framework takes effect on October 15, 2026. The revised structure introduces a Merchant Discount Rate (MDR) on eligible payments above ₹2,000, with merchants bearing the cost, Reuters reported.
Under the framework, eligible person-to-merchant transactions exceeding ₹2,000 will attract a 0.4% processing charge, capped at ₹300 per transaction. Merchant payments of up to ₹2,000 and transfers between individuals will remain exempt.
For example, an eligible ₹3,000 shopping payment would attract an MDR of ₹12. On a ₹10,000 payment, the merchant would pay ₹40 and receive ₹9,960 after the deduction. The customer would still pay only ₹10,000. The charge reaches ₹300 at ₹75,000 and remains capped at that amount for larger eligible transactions.
Small merchants receiving up to ₹1 lakh a month through UPI QR codes under the Person-to-Person-Merchant category will remain exempt. This exemption covers qualifying small businesses and street vendors.
A separate fee structure applies to specified services. Eligible payments for railways, telecommunications, insurance and fuel will carry a flat ₹5 merchant charge instead of the standard percentage-based fee. Capital market payments will attract a lower rate of 0.02%, capped at ₹300.
The framework aims to support investment in payment infrastructure, cybersecurity and customer service as UPI usage grows. For customers paying for groceries, shopping or other purchases, the new MDR remains a merchant processing cost rather than an additional UPI transaction charge.
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