UPI Charges from 15 October 2026: Who Pays, Who Doesn't, and What Merchants Cannot Do
As an ordinary payer you pay nothing extra on UPI from 15 October 2026. The new Merchant Discount Rate (MDR) of 0.4% falls on the merchant, only on specified merchant payments above Rs 2,000, and the official FAQ says merchants cannot pass it on to you and UPI apps cannot add a platform fee.
On 15 September 2026 the Department of Financial Services (Ministry of Finance) published a set of FAQs on a Merchant Discount Rate on select UPI person-to-merchant (P2M) transactions. This guide explains what those FAQs say. Every figure below comes from that document, linked under Sources. It is a government FAQ and policy framework, so read it as the official statement of how the charge is meant to work, not as a statute.
What changes on 15 October 2026
The FAQ says the finalised MDR framework and threshold structure take effect from 15 October 2026. It introduces an MDR of 0.4% on person-to-merchant UPI transactions above Rs 2,000. For transactions of Rs 75,000 and above, the MDR is capped at Rs 300 per transaction.
The FAQ gives these worked examples of what the merchant pays:
- Rs 2,000 paid to a merchant: no MDR.
- Rs 3,000: 0.40%, so Rs 12.
- Rs 50,000: 0.40%, so Rs 200.
- Rs 75,000 and above: a fixed Rs 300 (a Rs 1,00,000 payment would be Rs 400 at 0.4%, so the cap of Rs 300 applies).
What you pay as a customer
The FAQ is direct on this: UPI services continue without any cost to consumers. Person-to-person transfers stay free for both payer and beneficiary, including self-transfers, and the FAQ says there is no monthly quota or tiered cap on free UPI use for individuals. Scanning a QR code at a local vendor stays free for the customer whatever the purchase amount.
Recurring payments set up as UPI Mandates or AutoPay, such as utility bills, OTT subscriptions and recurring investments, are stated not to carry a prescribed MDR.
What merchants and apps cannot do
Two statements in the FAQ matter most if a shop or an app tries to charge you:
- Merchants cannot pass on MDR charges to customers while accepting payments through UPI. The FAQ says consumers pay only the posted price.
- UPI app providers shall not charge a platform fee or any other charge for any payment made through UPI, and are restricted from levying platform fees on UPI transactions.
The FAQ does not set out a complaint portal or penalty for a merchant or app that breaks these statements, so this guide does not either. If it happens to you, keep a screenshot of the posted price and of the UPI payment confirmation, because the gap between the two is your evidence.
Who pays the 0.4%, and who is exempt
The MDR is paid by the merchant to its acquiring bank. These cases are treated differently in the FAQ:
- Small merchants (P2PM): vendors receiving up to Rs 1 lakh a month through UPI QR directly into their accounts continue with zero MDR, and GST registration is not required to qualify. Merchants whose inward UPI credit exceeds Rs 1 lakh a month for 3 months in a row move to the P2M category.
- Flat Rs 5 instead of 0.4%: for categories such as railways, telecom, insurance and fuel, among others, a flat Rs 5 per transaction applies above Rs 2,000 (AutoPay mandates are separately stated to carry no MDR). The FAQ also places electricity, municipal water and piped gas bills in this flat-fee group.
- Capital markets: payments to mutual funds, securities, stockbrokers and dealers carry 0.02% of the transaction value, capped at Rs 300.
- Credit-linked UPI: RuPay credit cards linked to UPI and pre-sanctioned credit lines follow separate credit product rules, so this 0.4% framework does not cover them, which is not the same as being charge-free.
- Education fees: up to Rs 2,000 there is no MDR, and above that flat or capped structures apply.
What is still open
The FAQ says the operating parameters, fee distribution and category caps are decided by the UPI and Services Steering Committee headed by NPCI, and that a small merchant support fund will have its detailed framework finalised with the RBI within three months. The FAQ also urges people to rely on official updates from the Ministry of Finance, RBI, NPCI and PIB, and not to forward unverified messages about UPI charges. Details can still be refined, so check those sources before relying on a number.
Questions people ask
Will I be charged for UPI payments from 15 October 2026?
No. The Department of Financial Services FAQ says UPI continues without any cost to consumers, and that person-to-person transfers stay free for both payer and beneficiary.
Is there a fee on UPI payments above Rs 2,000?
A Merchant Discount Rate of 0.4% applies to specified person-to-merchant transactions above Rs 2,000, and the merchant pays it. For payments of Rs 75,000 and above it is capped at Rs 300 per transaction.
Can a shop add the UPI charge to my bill?
The FAQ says merchants cannot pass on MDR charges to customers while accepting payments through UPI, and that UPI app providers shall not charge a platform fee or any other charge for a payment made through UPI.
Sources
- Department of Financial Services, FAQs on Merchant Discount Rate (MDR) on Select UPI (P2M) Transactions, 15 September 2026, read in full on 2 October 2026.
- Department of Financial Services, press release on MDR on UPI, 15 September 2026.
Get this reviewed for your case. General guides don't know your facts. If a shop or app has charged you extra on a UPI payment, Vaksy can connect you with a verified advocate on the platform, in your own language, and you choose who to speak to.