Before you enter your UPI PIN, check the payment’s final amount and any fee shown on the confirmation screen. Then confirm whether the payment is person-to-person (P2P) or person-to-merchant (P2M), which funding source you selected, and whether a merchant-side charge is being presented as a customer fee. As of 7 October 2026, a revised Merchant Discount Rate (MDR) framework announced by the Ministry of Finance is scheduled to take effect on 15 October 2026; it is not yet in force.
Check the amount before you authorize
- Confirm the recipient. Check the displayed name and payment details to make sure the UPI transfer is going to the intended person or merchant.
- Identify the payment type. A transfer to another individual is P2P; a payment to a business is P2M. The announced MDR rules concern merchant payments, so do not apply them automatically to every UPI transfer.
- Check the selected funding source. Note whether the payment is drawn from a bank account, an eligible prepaid payment instrument (PPI) or wallet, or another available source. Terms can differ by product and provider.
- Review the confirmation screen. Check the final total and any separately stated fee before entering your UPI PIN. If the total differs from the price you agreed to pay, stop and ask the merchant or provider to explain it.
- Compare the charge with written terms. Check the payment app or bank’s current fee schedule and the merchant’s written terms or receipt. Keep the transaction details if you need to query the charge.
A label such as “UPI charge” does not by itself show who is meant to pay. In particular, MDR is a merchant-side charge within the payment ecosystem, not automatically a customer fee.
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What the announced MDR framework says
The Ministry of Finance’s 15 September 2026 announcement sets out revised MDR treatment scheduled to take effect on 15 October 2026. HDFC Bank also identifies 15 October as the effective date. On 7 October, these are announced future rules, not rules that have already taken effect. The Ministry says MDR is not a charge on customers and that banks have been advised to ensure merchants do not pass it on. It also says UPI applications may not impose platform fees or hidden charges under the announced framework. Ministry of Finance release via PIB; Ministry statement on MDR and customer charges; HDFC Bank’s UPI payment explainer.
| Payment or merchant category | Announced treatment |
|---|---|
| P2P UPI | Remains free irrespective of amount, according to the Ministry’s announcement. |
| P2M up to ₹2,000 | Zero MDR. |
| Qualifying small merchants receiving up to ₹1 lakh per month through UPI QR under P2PM | Zero MDR. |
| Specified P2M payments above ₹2,000 | 0.4% MDR, capped at ₹300 for transactions of ₹75,000 and above. |
| Qualifying payments above ₹2,000 in railways, telecom, insurance, fuel and agricultural inputs | Flat ₹5 MDR. |
| Capital-market payments | 0.02% MDR, capped at ₹300. |
These figures describe the Ministry’s announced framework, including its stated categories and thresholds; they are not a universal customer fee schedule. The Ministry estimates that approximately 96% of merchant transactions will remain unaffected, but that estimate does not determine whether a particular transaction or merchant qualifies. Ministry of Finance release via PIB.
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Why the funding source matters
Some merchant payments use a PPI, such as an eligible prepaid wallet, rather than a bank account. HDFC Bank describes certain PPI-based merchant interchange fees as ecosystem fees rather than customer charges. NPCI’s FAQ excerpt says customers do not pay charges for PPI-on-UPI transactions. Neither point means every wallet, bank account, biller or related service has identical pricing: check the terms for the source you actually selected. HDFC Bank’s UPI payment explainer; NPCI UPI FAQs.
How to question a fee
- Ask the merchant to identify the charge in writing and say whether it is part of the product or service price, or a payment surcharge.
- Compare the explanation with the merchant’s written terms, receipt and the payment provider’s current fee schedule.
- Do not authorize the payment if the final amount is different from the amount you agreed to pay.
- Keep the transaction details and the merchant’s written explanation if you need to follow up with the app, bank or provider.
Merchant-side terms can describe merchant service charges, but one provider’s terms do not establish another merchant’s pricing. For example, India Post Payments Bank permits merchant service charges in its merchant terms and lists 0% UPI MDR in its merchant table; this is an example, not a universal tariff. India Post Payments Bank merchant terms and conditions.
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