Money & RulesMyth vs Fact
UPI charges above ₹2,000: who actually pays?
A 0.4% fee on some UPI payments above ₹2,000 is coming. It is paid by merchants, not by you, and its start date is now uncertain.
TL;DRThe short version
- A 0.4% fee applies to UPI payments to merchants above ₹2,000, capped at ₹300 per payment.
- The merchant pays it, not you. Transfers to friends and family stay free.
- The scheduled start is 15 Oct 2026. A delay to 1 Jan 2027 is reported as likely but not confirmed.
- Check the official FAQ on who pays (Department of Financial Services): financialservices.gov.in (MDR FAQ, PDF)For any new start date, watch NPCI's UPI circulars at npci.org.in/circulars/upi. Shopkeepers: ask your bank if you qualify for zero MDR.
Key facts
- The fee
- 0.4% merchant discount rate (MDR)
- Applies to
- Person-to-merchant (P2M) UPI payments above ₹2,000
- Cap
- ₹300 per payment, for payments of ₹75,000 and above
- Who pays
- The merchant, not the customer
- Still free
- Person-to-person transfers, and merchant payments up to ₹2,000
- Scheduled start
- 15 Oct 2026. Delay to 1 Jan 2027 reported as likely; not confirmed
Short answer: you don't. If you pay a shop ₹3,000 by UPI, the new 0.4% fee is paid by the shop to its bank. It is not added to what you pay, and sending money to friends and family stays free.
What exactly is changing?
The fee is called the merchant discount rate (MDR). It is what a merchant pays its bank for processing a digital payment. Card payments have always had one. UPI payments mostly haven't.
Under the new framework, a 0.4% MDR applies to person-to-merchant (P2M) UPI payments above ₹2,000. For payments of ₹75,000 or more, the fee is capped at ₹300.
Here is what that looks like for the merchant, using the 0.4% rate:
| Payment to a merchant | Fee paid by the merchant |
|---|---|
| ₹2,000 or less | ₹0 |
| ₹3,000 | ₹12 |
| ₹10,000 | ₹40 |
| ₹75,000 or more | ₹300 (cap) |
The government's FAQ uses the same ₹3,000 → ₹12 example.
Myth vs fact
The myths below are the questions behind the biggest searches.
01
Myth I will pay 0.4% extra when I pay more than ₹2,000 by UPI.
Fact The 0.4% MDR is charged to the merchant by its bank. The government's FAQ and press release describe it as a merchant-side fee. It is not added to your payment by UPI.
02
Myth Sending money to friends and family above ₹2,000 will be charged.
Fact No. The fee only covers person-to-merchant (P2M) payments. Person-to-person (P2P) transfers stay free.
03
Myth Every shop payment above ₹2,000 will attract the fee.
Fact Not all. Small merchants under the zero-MDR framework stay exempt, and the government says about 96% of merchant transactions will be unaffected. Some sectors, such as railways, telecom, insurance and fuel, have a flat ₹5 fee instead of 0.4%.
04
Myth The fee definitely starts on 15 October.
Fact 15 October is the scheduled date, but industry bodies have asked NPCI to delay it, reportedly to 1 January 2027. A steering-committee meeting set for 9 October did not take place. As of 11:45 AM IST on 10 October, NPCI has not officially announced a new date.
So when does it start?
This is the part nobody can answer with certainty yet. 15 October 2026 is the officially scheduled date. But merchant bodies, fintechs and payment companies have asked NPCI for more time, and reports say a delay to 1 January 2027 is the likely new date. A steering-committee meeting expected to decide this on 9 October did not happen, and the Finance Minister has said the decision on any deferral rests with the payments-system stakeholders, not the GST Council.
As of 11:45 AM IST on 10 October, the timing is still unconfirmed. If no postponement is announced, 15 October remains the scheduled date. We will update this page as soon as NPCI announces a decision.
What should you do?
- As a customer: nothing. Pay as usual. If a shop tries to add a "UPI charge" on top of your bill, ask them to explain it.
- As a small shopkeeper: check with your bank or payment app whether your account falls under the zero-MDR category for small merchants.
- As a business taking large UPI payments: budget for 0.4% on payments above ₹2,000, capped at ₹300 per payment, and watch for the final start date.
Timeline
Sep 2026
UPI Steering Committee fixes the MDR at 0.4% for merchant payments above ₹2,000.
8 Oct 2026
Reports say merchants, fintechs and payment firms have asked NPCI to postpone, reportedly to January 2027.
9 Oct 2026
A UPI Steering Committee meeting on the decision is reported to have been called off.
10 Oct 2026
Reports say 1 January 2027 has emerged as the likely new date; no official NPCI announcement yet.
15 Oct 2026
Scheduled start date, unless a postponement is announced.
Trend Monitor
People across India are searching whether they will be charged for UPI payments above ₹2,000, including in Hindi. Interest jumped in mid-September and has stayed steady every day since.
- upi charges start date+83,850%
- 2000 se upar upi charges+47,500%
- upi p2p charges+38,900%
Google Trends, India, rising queries, 30 days