UPI payments in India are set to get a new pricing structure for certain high-value merchant transactions. While UPI payments above Rs 2,000 may now attract charges, the new Merchant Discount Rate (MDR) will be applicable to merchants and not directly to consumers.
The new UPI payment charges are said to come into effect from October 15, 2026, with the government continuing to keep smaller UPI transactions free.
What Is the Charge for UPI Transactions Exceeding 2000 Rupees?
There aren't any UPI charges for consumers. Users will not have to pay an additional fee when making a UPI payment above Rs 2,000.
Instead, eligible merchant transactions above the Rs 2,000 threshold can attract an MDR of 0.4% of the transaction value, capped at Rs 300 per transaction. The charge is paid by the merchant and is not supposed to be passed on to the customer.
For instance, a Rs 10,000 eligible UPI payment would attract an MDR of Rs 40 on the merchant side. A Rs 50,000 transaction would attract Rs 200, subject to the Rs 300 cap.
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Rs 5 MDR for Some UPI Transactions
A separate flat-rate structure applies to certain categories, including railways, telecom, insurance and fuel. For eligible transactions above Rs 2,000 in these categories, the MDR will be Rs 5 per transaction instead of 0.4%.
Once again, this is a merchant-side charge, meaning customers will not be charged an additional Rs 5 for making the payment.
National Payments Corporation of India (NPCI) has clarified that UPI transactions of up to Rs 2,000 will remain free, with banks and payment system providers barred from imposing direct or indirect charges on these transactions.
Consumers will continue to transact free of cost using UPI as they have been doing till now. Person-to-Person (P2P) transactions and Person-to-Merchant (P2M) transactions up to Rs 2,000 remain outside the scope of MDR.
— NPCI
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UPI Payments up to Rs 2,000 Remain Free
Person-to-person UPI transfers also remain free, regardless of the transaction amount. So, sending over Rs 2,000 to a friend or family member through UPI will not attract a transaction fee.
Overall, for regular UPI users, there is no new direct charge to worry about. The Rs 2,000 threshold determines when MDR can apply to eligible merchant transactions, rather than introducing a fee for customers.
In other words, UPI remains free for consumers, while merchants may have to pay a charge on certain transactions above Rs 2,000 from October 15.
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