UPI merchant transactions over Rs 2,000 to attract 0.4% fee

Merchants will have to pay a fee of 0.4 per cent on receiving payments of more than Rs 2,000 via UPI starting from October 15, the National Payments Corporation of India (NPCI) said on Tuesday, a day after the government notified that smaller-value payments cannot be charged by banks or service providers.

This fee, called Merchant Discount Rate (MDR), will be capped at Rs 300 per transaction. This essentially means that the MDR fee will not exceed Rs 300 if a UPI payment of Rs 75,000 or more is made to a merchant. Regarding Merchant Discount Rate (MDR) on Select UPI (P2M) Transactions Please refer to the FAQs here: pic.twitter.com/4HMU0YZ2AC — NPCI (@NPCI_NPCI) September 15, 2026 Meanwhile, UPI payments of more than Rs 2,000 to certain merchant categories such as railways, telecom services, insurance, and fuel, among others, will attract a flat MDR fee of Rs 5 per transaction.

Also Read | Government bars fees on UPI payments up to Rs 2,000, RuPay debit card payments “This flat-rate model prevents cost escalations in critical public services, utility bill collection, and thin-margin sectors like fuel retail. It ensures that essential consumer services remain low-cost and digitally efficient,” the NPCI said in a statement.

The revised MDR framework announced on Tuesday applies only to person-to-merchant (P2M) transactions. Person-to-person (P2P) transactions will continue to be free, irrespective of the size of the transaction. NPCI's announcement comes just a day after the Ministry of Finance on Monday notified that banks and system providers cannot levy charges on UPI transactions of up to Rs 2,000 and RuPay debit card payments. “No bank or system provider shall impose, whether directly or indirectly, any charge upon a person making or receiving a payment by using the electronic modes of payment specified in paragraph above,” the government notification said in which it specified RuPay debit cards and UPI transactions of up to Rs 2,000.