India’s UPI to Introduce Fees on Large Merchant Payments
India’s Unified Payments Interface (UPI) will end its more than six-year zero-fee era for certain large merchant transactions from October 15, 2026. Under new rules announced by the National Payments Corporation of India (NPCI), a 0.4% Merchant Discount Rate (MDR) will apply to merchant transactions above ₹2,000. The charge cannot be passed on to consumers.
Certain merchant categories, including railways, telecom services, insurance and fuel, will instead face a flat ₹5 fee. For other merchants, MDR on transactions above ₹75,000 will be capped at ₹300. Small merchants receiving up to ₹1 lakh per month through UPI QR payments will remain exempt, while UPI QR transactions with merchants in rural and semi-urban areas will also attract no fees.
NPCI said the new charges are intended to support continued investment in UPI infrastructure, cybersecurity, fraud prevention, reliability and customer service. The move follows a change in India’s payments legislation allowing fees on UPI transactions above ₹2,000. The government has also said UPI apps cannot impose platform or hidden charges on users and has advised banks to prevent merchants from passing MDR costs to customers.
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