UPI Charges From 15 October: What the New MDR Means for You
📅 Updated as of 3 Oct 2026. The new UPI charges start on 15 October 2026, per NPCI’s circular and FAQs of 15 September 2026.
For the first time, UPI will cost merchants money. From 15 October, shops pay a Merchant Discount Rate (MDR) of 0.4% on UPI payments above ₹2,000. The short version for you: you still pay nothing extra. But it changes how some shops may treat UPI versus cards, so here’s what you need to know.
The new UPI charges at a glance
| Payment | Merchant pays |
|---|---|
| Up to ₹2,000 | Nothing |
| ₹2,001 to ₹74,999 | 0.4% |
| ₹75,000 and above | ₹300 (cap) |
| Railways, telecom, insurance, fuel, utilities (above ₹2,000) | Flat ₹5 |
| Mutual funds and shares | 0.02%, max ₹300 |
| Small merchants (up to ₹1 lakh a month via QR) | Nothing |
| Person-to-person (P2P) transfers | Nothing |
What changes for you
- No charge for customers. Merchants are not allowed to pass the MDR on to you. If a shop adds a “UPI fee”, that’s against the rules.
- P2P stays free. Sending money to family and friends is unaffected, at any amount.
- Small payments stay free. Tea, groceries, auto rides and most daily UPI payments are under ₹2,000.
- Bigger bills may get pushback. Some shops may now be less keen on UPI for large amounts. But UPI at 0.4% is still far cheaper for them than credit cards (typically 1.5–2.5%) or debit cards (up to 0.9%), so most will keep accepting it.
RuPay credit cards on UPI: different rules
Credit-linked UPI payments, including RuPay credit cards linked to UPI, are not covered by this new 0.4% framework. They already follow card-style MDR. Banks’ published rates for RuPay credit cards on UPI above ₹2,000 range from about 0.5% to 1.75% + GST, depending on the merchant category.
The Finance Ministry has also confirmed that only RuPay credit cards can be used on UPI; Visa and Mastercard credit cards can’t. So if you want to earn card rewards while paying by UPI QR code, a RuPay credit card (like the PNB Luxura RuPay) is still the only way.
What we’d do
| You pay… | Best way |
|---|---|
| Under ₹2,000 at a shop | UPI as usual, or a RuPay credit card on UPI if it earns rewards |
| Above ₹2,000 at a shop that takes cards | Your best rewards credit card. UPI from your bank account earns nothing. |
| Above ₹2,000 at a small shop that only takes UPI | RuPay credit card on UPI if you have one; otherwise UPI from your bank |
| Family and friends | UPI P2P, still free |
If a merchant tries to charge you extra for UPI, politely point out the NPCI rule. If they insist, you can raise a complaint through your UPI app’s help section.
DealUni take
Nothing changes in your pocket. UPI stays free for you, and for 95% of payments it stays free for shops too. The bigger lesson for points collectors is the same as before: for larger bills, a good rewards credit card beats UPI from your bank account every time, and a RuPay credit card is the only way to earn rewards on UPI QR payments.
Aapke liye UPI muft hi rahega, bas dukaandar ka hisaab badlega. (UPI stays free for you; only the shopkeeper’s maths changes.)
Sources: NPCI’s UPI MDR circular and FAQs (15 Sep 2026), as reported by SCC Online; Finance Ministry statement via ThePrint; card MDR comparison from Business Standard; RuPay credit card on UPI rates from Canara Bank’s published MDR schedule (indicative; varies by bank). Check npci.org.in for the latest.
