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1Scan for outdated or missing drivers - takes under a minute2Repair Windows errors before they cause bigger problems3Fix the driver behind crashes, sound loss and screen glitchesFor customers, UPI payments remain free under the Department of Financial Services’ announced framework: it says neither UPI apps nor merchants may charge the customer a UPI fee or pass on merchant discount rate (MDR). MDR is a merchant-side charge, not automatically a fee deducted from the payer. The important timing qualification: the DFS FAQ dated 15 September 2026 says its new merchant MDR framework starts on 15 October 2026, a date still in the future as of 4 October 2026. The rates below are therefore announced provisions, not confirmed rules already in force.
Does UPI charge the customer?
The DFS FAQ says UPI services will continue without cost to consumers, that person-to-person (P2P) transfers remain free for both sender and recipient, and that UPI apps may not charge a platform fee for UPI payments. It also says merchants cannot pass MDR on to customers as a UPI surcharge. These are statements in the FAQ about its framework announced on 15 September 2026; its stated start date is 15 October 2026. Department of Financial Services MDR FAQ
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NPCI has separately said customers pay no charge for transactions using prepaid payment instruments (PPIs) on UPI, including when receiving a payment. In its March 2023 clarification, NPCI distinguished bank-account-to-bank-account UPI, which remained free for customers and merchants, from interchange on certain PPI merchant transactions. That merchant-side interchange did not create a customer charge. NPCI UPI FAQ NPCI 2023 release
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What MDR is, and who pays it
Merchant discount rate is a charge associated with accepting a payment, not a fee that automatically comes out of the customer’s UPI transfer. The DFS FAQ describes MDR as a merchant-side charge and says merchants may not pass it to buyers. It also says UPI apps may not impose a platform fee for UPI payments. So the announced MDR rates below describe what may be charged on the merchant side, not an extra amount the customer should expect to pay at checkout. Department of Financial Services MDR FAQ
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Rates in the announced framework, and when they are stated to apply
The DFS document, titled “Merchant Discount Rate (MDR) on Select UPI (P2M) Transactions: Frequently Asked Questions,” is dated 15 September 2026 and states that the framework is to commence on 15 October 2026. As of 4 October 2026, that date has not arrived. The table reflects what the FAQ announces; it should not be read as proof that the rates are already operative. Department of Financial Services MDR FAQ
| Payment or merchant category | Announced MDR in the DFS FAQ | Qualification |
|---|---|---|
| General person-to-merchant (P2M) UPI payment up to ₹2,000 | No MDR | Threshold stated in the 15 September 2026 FAQ; framework commencement stated as 15 October 2026. |
| General P2M payment above ₹2,000 | 0.4% | The FAQ says MDR is capped at ₹300 for transactions of ₹75,000 or more. |
| Specified sectors, including railways, telecom, insurance and fuel | ₹5 flat MDR above ₹2,000 | Sector rate stated in the FAQ; its operative status depends on the stated 15 October 2026 start and any formal implementing instrument. |
| Capital-market transactions | 0.02%, capped at ₹300 | Rate stated in the FAQ; its operative status depends on the stated 15 October 2026 start and any formal implementing instrument. |
| P2PM small merchants | Zero MDR | The FAQ describes this classification as up to ₹1 lakh in monthly UPI QR collections directly into the merchant’s account. |
DFS says NPCI’s UPI and Services Steering Committee decides operational parameters, fee distribution models and category caps. The FAQ also says the small-merchant fund’s detailed framework is still to be finalized in consultation with RBI. It describes P2PM status as an overall account classification: one payment above ₹2,000 does not, by itself, make an otherwise exempt P2PM merchant subject to the general P2M MDR. Department of Financial Services MDR FAQ
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Why older pages may say all UPI is free
The government’s DFS FY 2025–26 annual report records the earlier policy position that, from 1 January 2020, no charge including MDR was payable on RuPay debit-card and BHIM-UPI payments. It also describes time-limited government incentive schemes for RuPay and low-value BHIM-UPI P2M transactions. That context helps explain older claims, but it does not establish whether the later 2026 MDR provisions have been separately finalized or implemented. DFS annual report
What to do if a merchant adds a UPI surcharge
The DFS FAQ says merchants onboarded to accept UPI cannot pass MDR charges to customers. If a shop adds a separate UPI fee, ask for an itemized bill and clarification of the charge; the announced MDR itself is not authorization to add a customer surcharge. The FAQ also says UPI apps may not charge a platform fee for UPI payments. Because the framework’s stated effective date is 15 October 2026, check the applicable official notices if you need to resolve a dispute arising before or after that date. Department of Financial Services MDR FAQ
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