What changes on 15 October
A merchant discount rate (MDR) is the fee a shop pays its bank to accept a digital payment. Until now, UPI payments to shops had none. From 15 October 2026, the Ministry of Finance says shops pay 0.4% on UPI payments above ₹2,000, capped at ₹300 a payment.
Nothing changes for you as the person paying. The official FAQ says UPI stays free for consumers, UPI apps can't add a platform fee, and shops can't pass the fee on to you.
What a shop pays, with examples
| You pay the shop | Fee the shop pays | You pay extra |
|---|---|---|
| ₹2,000 or less | Nothing | Nothing |
| ₹3,000 | ₹12 (0.4%) | Nothing |
| ₹50,000 | ₹200 (0.4%) | Nothing |
| ₹75,000 or more | ₹300 (the cap) | Nothing |
Payments that stay free, or pay less
- Sending money to a person (family, friends, your own other account): free, whatever the amount.
- AutoPay mandates for SIPs, OTT subscriptions and bills: no MDR.
- Small vendors who receive up to ₹1 lakh a month into their own account (called P2PM): no MDR, even on a payment above ₹2,000.
- Fuel, railways, telecom, insurance and utility bills: a flat ₹5 for the merchant on payments above ₹2,000, not 0.4%.
- Mutual funds, shares and brokers: 0.02%, capped at ₹300.
- RuPay credit card on UPI: this follows credit card rules, not these.
If a shop asks you to pay extra
A shop can't add the MDR to your bill. If one asks for a "UPI charge", pay only the listed price, or note the shop's name and the amount and complain through your UPI app's help section or your bank. The FAQ also asks people to rely only on the Ministry of Finance, the RBI, NPCI or PIB for news on UPI charges, not forwarded messages.
If you sell on the side
Run a small business or freelance alongside your job and take payments by UPI? On a merchant QR, payments above ₹2,000 now cost you 0.4%. A QR linked to your personal account stays free while it takes up to ₹1 lakh a month; after three months in a row above that, it's moved to the merchant category. That fee is a business expense: you can deduct it from your business income when you file, if you keep the statements that show it.
Common questions
Will I be charged for UPI payments from 15 October 2026?
No. UPI stays free for people paying. Shops pay a fee of 0.4% on some payments above ₹2,000, and they are not allowed to add it to your bill.
What is the MDR on UPI?
0.4% on person-to-merchant payments above ₹2,000, capped at ₹300 a payment. Fuel, railways, telecom, insurance and utilities pay a flat ₹5; mutual funds and brokers pay 0.02%.
Is sending money to family on UPI still free?
Yes. Person-to-person transfers, including to your own other accounts, stay free whatever the amount.
Do SIP and subscription AutoPay mandates attract MDR?
No. UPI AutoPay mandates carry no MDR.
Work it out for yourself
- Profit margin: Gross, operating and net margin.
- GST: Add or remove GST from a price.
Sell on the side? See your margin after costs, including the new UPI fee.
Open the profit margin calculatorSources
- FAQs: Merchant Discount Rate (MDR) on select UPI (P2M) transactions, 15 September 2026, Department of Financial Services, Ministry of Finance
This guide explains the rules in general. For your own situation, .