Explained: How Much Fee On UPI Payments Above ₹2,000?

Since morning, there has been a lot of speculation in the media and the public on the UPI charges to be imposed by the government of India. The suspense has finally ended. The National Payments Corporation of India which manages digital payments announced a big change for UPI users and business owners across the country.

NPCI officially notified that a 0.4 percent Merchant Discount Rate will be charged on Person to Merchant UPI transactions above 2000 rupees. This new payment rule will officially come into effect starting from October 15, 2026 for all applicable merchant accounts.

According to the official notification issued by NPCI the new MDR fee will only apply when customers pay money to merchants for shopping or services. Regular Person to Person money transfers between friends or family members will remain completely free of any extra charges.

For high value purchases of 75000 rupees and above the maximum MDR charge has been capped at 300 rupees per single transaction.

Small shopkeepers and street vendors who process daily payments under 2000 rupees will not face any extra charges under this new rule. However bigger retail store owners and e-commerce companies will have to pay this 0.4 percent fee on every big payment they accept through UPI.

Many merchant associations are raising concerns that businesses might try to pass this extra cost burden on consumers. It remains to be seen how the reaction of merchants on this new rule.

SIMPLE EXPLANATION :

For example, a ₹5,000 UPI payment would attract an MDR of ₹20 at 0.4%, while a ₹50,000 payment would cost the merchant ₹200. For transactions of ₹75,000 and above, the MDR will be capped at ₹300 per transaction, meaning a ₹1 lakh payment would also attract a maximum charge of ₹300.