Archive · 16 Sep 2026
New UPI Merchant Fee Sends Fintech Shares Into Volatility
India is changing how some UPI payments are handled.
Starting October 15, merchants will pay a small fee when customers make UPI purchases above Rs 2,000.
The fee will be 0.4% of the payment.
It will not be charged directly to customers.
Person-to-person payments and smaller merchant payments will remain free.
The government says people will still have unlimited free UPI use.
Fintech companies initially welcomed the change because merchant fees could create new revenue.
However, some fintech shares later fell after first rising.
The government will impose a 0.4% Merchant Discount Rate on UPI merchant payments above Rs 2,000 from October 15.
The fee applies to person-to-merchant transactions and is capped at Rs 300 for payments of Rs 75,000 or more.
Customers will not pay the charge, while person-to-person payments and small merchant transactions remain free.
Paytm owner One97 Communications initially rose 7.24% to a 52-week high of Rs 1,856.50 on the BSE.
Pine Labs and One MobiKwik Systems later reversed early gains, with their shares trading lower.
- Who
- The Indian government, merchants, customers, and fintech companies including Paytm, Pine Labs, and One MobiKwik Systems.
- What
- A 0.4% Merchant Discount Rate is being introduced for UPI person-to-merchant payments above Rs 2,000.
- When
- The fee takes effect on October 15; the government announced it on Tuesday.
- Where
- Across India's Unified Payments Interface system, with related share trading reported on the BSE.
- Why
- The measure is intended to generate additional revenue from merchant payments that were previously free while keeping customer UPI payments free.
- Fee rate
- 0.4% Merchant Discount Rate
- Transaction threshold
- Payments above Rs 2,000
- Effective date
- October 15
- Fee cap
- Rs 300 for payments of Rs 75,000 or more
- Customer charge
- None
- Unaffected payments
- Person-to-person payments and small merchant transactions
- Paytm owner's initial move
- One97 Communications rose 7.24% intraday to Rs 1,856.50