Archive · 17 Sep 2026
UPI payments stay free for customers under revised rules
The government is changing some rules for UPI payments from 15 October 2026.
Regular customers will not have to pay extra merchant fees.
Sending money to friends and family will stay free, no matter how much is sent.
Small eligible shops and street vendors will also remain exempt from these fees.
Purchases of up to ₹2,000 will not attract MDR.
Some larger specified merchant payments may have a fee charged to the merchant, not the customer.
Automatic payments made through UPI AutoPay will remain exempt from MDR.
Essential bills up to ₹2,000 will also remain exempt, while larger covered payments may carry a ₹5 merchant charge.
GST applies to applicable MDR charges, but there is no separate GST on MDR itself.
Customers will not pay merchant processing fees on UPI payments under rules taking effect on 15 October 2026.
Person-to-person transfers between friends and family will remain free regardless of the amount sent.
Eligible small merchants receiving up to ₹1 lakh monthly through UPI QR codes will remain exempt from MDR.
Merchant payments of up to and including ₹2,000 will remain free of MDR; specified payments above that face 0.4% MDR capped at ₹300.
UPI AutoPay and covered essential-sector payments up to ₹2,000 remain exempt, while larger essential payments carry a ₹5 merchant charge.
- Who
- UPI customers, merchants, the Finance Ministry, and businesses handling merchant fees.
- What
- A revised UPI merchant-fee framework will keep several types of transactions exempt from MDR while charging merchants in some higher-value cases.
- When
- The revised rules take effect on 15 October 2026.
- Where
- The rules apply to UPI transactions, including payments to merchants, small shops, and essential-service providers.
- Why
- To define when merchant discount rate charges apply while keeping customers from bearing those charges and protecting eligible small merchants.
- Effective date
- 15 October 2026
- Customer liability
- Customers will not pay the merchant processing fee, or MDR.
- Person-to-person transfers
- Transfers between individuals remain free regardless of amount.
- Small-merchant threshold
- Eligible merchants receiving up to ₹1 lakh per month through UPI QR codes remain exempt.
- Purchase threshold
- Merchant payments up to and including ₹2,000 remain exempt from MDR.
- Specified payments above ₹2,000
- A 0.4% MDR applies, capped at ₹300.
- Essential-sector payments
- Covered payments up to ₹2,000 are exempt; larger payments carry a flat ₹5 merchant charge.
- GST treatment
- There is no separate GST on MDR, but GST applies to applicable MDR charges.