UPI gets a fee from 15 October. So why won't you pay a single rupee of it?
From 15 October 2026, some UPI payments to shops carry a 0.4% fee. But the shop pays it, not you, and more than 95 in 100 shop payments stay free.
- From 15 October 2026, UPI payments to shops above ₹2,000 carry a fee of 0.4% 1,2.
- The shop pays it, not the customer. Shops and apps are not allowed to add it to your bill 1,3,4.
- Sending money to family and friends stays free, at any amount 1.
- Shop payments of ₹2,000 or less stay free. That's more than 95 in 100 shop payments 1,3.
A small fee, and the shop pays it
Since January 2020, shops paid nothing to accept UPI 3. On 15 September 2026, the government and the National Payments Corporation of India (NPCI) announced a change 1,3. From 15 October, a merchant discount rate of 0.4% applies to shop payments above ₹2,000 1,2.
The fee is cut from the money the shop receives 6. The customer pays the same price as before 1,4.
| You pay the shop | Fee (0.4%) | Who pays |
|---|---|---|
| ₹2,000 or less | ₹0 | Nobody |
| ₹3,000 | ₹12 | The shop |
| ₹50,000 | ₹200 | The shop |
| ₹75,000 or more | ₹300 (the cap) | The shop |
| Train ticket, fuel, power bill above ₹2,000 | Flat ₹5 | The seller |
Source: NPCI framework, via Payment Expert and Angel One 1,4
The fee stops at ₹300
The fee grows with the bill, but only up to ₹75,000. After that it stays at ₹300, however big the payment 1. Some sectors pay a flat ₹5 instead: railways, fuel, telecom, utilities and insurance 1,4.
Source: NPCI framework, via Payment Expert 1 · ₹1 lakh example is our maths
Most payments stay free
Everyday kirana bills are usually small. NPCI says more than 95% of shop payments stay free 1. The Finance Ministry puts it at about 96% 3. We use the lower figure.
Each dot is one shop payment. Green ones pay no fee.
Source: NPCI via Payment Expert 1; Finance Ministry via LoansJagat 3
Very small shops get extra room. A shop that takes up to ₹1 lakh a month through its UPI QR code pays no fee 5. If it crosses ₹1 lakh a month for three months in a row, it moves to the standard rate 6.
The twist: you still pay ₹0
Banks cannot pass the fee on to customers 4. A shop is not allowed to add it to your bill 3. UPI apps cannot charge you a platform fee either 1. So if a shop says "UPI costs extra now", the rules say otherwise.
Why it matters
- For you: nothing changes at the counter. Same price, no extra charge.
- For shopkeepers: bigger shops lose a small part of large UPI payments. Traders' groups have opposed the fee 3.
- For payment companies: the fee is shared between the banks and the UPI app 6. Pine Labs' CEO said it gives fintech firms a clearer way to earn money 1.
Send them this. Or send it to the family group before someone panics.
Sources
- Payment Expert, India introduces 0.4% merchant fee on UPI payments above ₹2,000, 16 Sep 2026
- Outlook Money, UPI MDR of 0.40 per cent from October 15: what changes for merchants and consumers, Sep 2026
- LoansJagat, UPI MDR from 15 October: 0.4% fee and exemptions, Oct 2026
- Angel One, UPI merchant charges: who pays and who does not from October 15, 2026, 16 Sep 2026
- NewsBytes, NPCI imposes merchant UPI charges over ₹2,000; P2P free, Sep 2026
- Cashfree, UPI MDR: a guide for merchants, Sep 2026
How we did this. Every number links to its source. Where sources disagree, we leave the number out and say so. When we work out a number ourselves, we say "our maths". This explains the rules as reported. It is not financial or legal advice.