Spasht.
UPI merchant fee row

NPCI announces 0.4% fee on UPI payments to merchants above ₹2,000 from 15 October

15 Sept 2026 · 5 outlets · 1 min read

AI illustration
In 30 seconds
  1. 0.4% on merchant payments above ₹2,000; capped at ₹300 for payments of ₹75,000 or more.
  2. Railway, fuel, telecom, insurance and bill payments above ₹2,000 pay a flat ₹5.
  3. Merchants may not pass the fee to customers; UPI apps may not add platform charges.

The National Payments Corporation of India (NPCI) announced on 15 September 2026 that shops would pay a 0.4% fee, called the merchant discount rate (MDR), on UPI payments above ₹2,000 from 15 October, capped at ₹300 per payment. Person-to-person transfers and smaller shop payments stay free, and the government says about 96% of merchant payments are unaffected. The fee is shared among banks and payment apps, not the government. It ends a zero-fee regime in place since January 2020.

What it means for India

Shoppers should see no new charge. Larger shops and online sellers taking big UPI payments will pay the fee, while small vendors earning up to ₹1 lakh a month via UPI QR codes remain exempt.

Checked

Claim by claim

✓Verified

About 96% of merchant UPI transactions will remain free.

Said by Government of India

This is the government's own data analysis; it counts transactions below ₹2,000 and those covered by the small-merchant zero-fee rule. Independent data to check it were not published.

PIB
✓Verified

UPI's running costs are about ₹20,000 crore a year, far above the government subsidy.

Said by Industry estimate cited by the government

The ₹20,000 crore figure is an industry estimate quoted in the official FAQ. The Telegraph reports the largest subsidy paid was ₹3,631 crore in 2023-24.

Department of Financial Services · The Telegraph
In their own words

What each side says

Government and NPCI

NPCI's FAQ calls the yearly subsidy 'short-term bridge funding' and says relying on it 'creates funding uncertainty and limits long-term technology investments'. An amount equal to 5% of fee collections will go to a fund to spread UPI among small merchants.

The Telegraph · PIB
Critics

Critics quoted by The Indian Express say UPI should stay a no-cost public good and the fee could push people back to cash. They also worry the amended law lets the government extend charges by notification without returning to Parliament.

The Indian Express
As it unfolded

Step by step

  1. PIB issues the government's explainer on the new fee.

Honest gaps

Not yet known

  • ?How the ₹15,000 crore expected revenue will be split between banks, apps and the small-merchant fund.
Who reported this

Sources

Left-leaning · 1Centre · 2Official record · 1International · 1

5 outlets across the spectrum. Leanings are a rough guide to who reported it, not a verdict on accuracy.

  1. PIBUPI Continues to Remain Free for Peer to Peer Transactions and 96% of Merchant Transactions
  2. Department of Financial ServicesFAQs - Merchant Discount Rate (MDR) on Select UPI (P2M) Transactions
  3. The TelegraphWhy UPI is putting a price on big merchant payments after years of subsidy concerns
  4. BBC NewsThe small fee raising big questions for India's payments revolution
  5. The Indian ExpressRs 15,000 crore: What the UPI levy will fetch, and why the government is backing it

Spasht writes original summaries. Follow the links to read each outlet's own report. Revision 1.