Govt announces UPI charges, free for consumers

The government has announced a new Merchant Discount Rate (MDR) framework for select UPI transactions, under which merchants will pay a fee on person-to-merchant (P2M) payments above Rs 2,000, while consumers will continue to use UPI free of charge. The new framework will take effect from October 15, 2026. Under the standard P2M structure, a 0.4% MDR will apply to UPI transactions above Rs 2,000. For transactions of Rs 75,000 and above, the MDR will be capped at Rs 300 per transaction.The new MDR framework does not apply to person-to-person (P2P) UPI transactions. Transfers between individuals, including sending money to family or friends and transfers between a person’s own bank accounts, will remain free. This charge is capped at Rs 300 per transaction, one that the Finance Ministry has advised banks to ensure merchants don't pass on to consumers.

UPI Payments to Remain Free for Person to Person transactions; MDR Applicable Only on Large-Value Merchant Transactions

The Government has amended the Payment and Settlement Systems (PSS) Act, 2007 empowering the government to notify specific electronic payment modes where… pic.twitter.com/FeTUXMhSml

— PIB India (@PIB_India) September 15, 2026

Certain merchant categories will have a separate flat-rate structure. Railways, telecom services, insurance and fuel, among other specified categories, will attract an MDR of Rs 5 per transaction above Rs 2,000 instead of the standard 0.4% rate.Capital-market transactions have been placed under a separate MDR structure. UPI payments involving mutual funds, securities, stockbrokers, dealers and investment platforms will attract an MDR of 0.02%, subject to a maximum cap of Rs 300.