Will I have to pay a UPI charge from 15 October? The Ministry of Finance says customers should not pay merchant discount rate (MDR) on UPI purchases, and person-to-person transfers remain free. But its 15 September 2026 announcement does not specify an effective date, so the claimed 15 October start is not confirmed by the official sources cited here. Check for an NPCI circular or government notification before treating that date as settled.
What the announced UPI rules cover
The Ministry of Finance’s 15 September 2026 PIB release describes revised MDR rates for specified person-to-merchant payments. MDR is a charge within the merchant payment ecosystem, rather than a fee charged to the customer. The release says the framework followed committee deliberations, but does not provide a complete operational specification for every merchant classification or settlement arrangement.
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That distinction matters: a UPI transfer to another individual is not treated the same as a payment to a merchant. The amount, merchant eligibility and sector can also change the stated MDR rate.
- P2P (person-to-person): Sending money to or receiving money from another individual.
- P2M (person-to-merchant): Paying a business or merchant for goods or services.
- MDR (merchant discount rate): A merchant-side charge described by the release as distributed among payment ecosystem participants, including banks, payment service providers and UPI application providers. It is not a tax collected by the Government or NPCI.
UPI MDR rates and exceptions in the September 2026 release
The following rates are those stated in the Ministry of Finance release. They describe merchant-side MDR, not an amount a customer is instructed to pay.
| Transaction case | Stated treatment | Who the rule concerns |
|---|---|---|
| P2P transfers, any amount | Free; no transaction fee, platform fee or other charge for individuals sending or receiving money through UPI. | Individuals transferring money to one another. |
| P2M merchant payments up to ₹2,000 | Zero MDR. | Merchant payments at or below the stated amount threshold. |
| Qualifying small merchants receiving up to ₹1 lakh per month through UPI QR codes under the P2PM category | Zero MDR on all transactions. | Eligible small merchants, including street vendors; the release does not spell out all operational eligibility rules. |
| Specified P2M payments above ₹2,000 | 0.4% MDR. For transactions of ₹75,000 and above, the MDR is capped at ₹300 per transaction. | Specified merchant payments, subject to the separate sector and merchant-category rules. |
| Payments above ₹2,000 in railways, telecommunications, insurance, fuel and agricultural inputs | Flat ₹5 MDR per transaction. | The listed essential and thin-margin sectors. |
| Payments relating to mutual funds, securities, stockbrokers and dealers | 0.02% MDR, capped at ₹300 per transaction. | The listed capital-market categories. |
Do not apply the 0.4% figure to every merchant payment: the release lists separate zero-MDR cases, a flat charge for certain sectors and a different rate for capital markets. It also does not explain every possible overlap between merchant status and sector classification. A merchant needing the applicable rate for a specific transaction should confirm its classification and implementation with its bank or acquirer.
How the thresholds work
The release sets out three distinct thresholds, and they answer different questions:
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- ₹2,000: P2M payments up to this amount are stated to remain free of MDR. The specified 0.4% category is described for payments above ₹2,000.
- Up to ₹1 lakh per month: Qualifying small merchants receiving this amount through UPI QR codes under P2PM are stated to retain zero MDR on all transactions. This is a merchant eligibility condition, not a per-payment cap.
- ₹75,000 and above: For the specified 0.4% MDR category, the charge is capped at ₹300 per transaction at this transaction-value threshold.
The release does not supply all operational rules for determining which merchants qualify as small merchants or how every classification is applied. The stated figures should not be used to infer an unlisted exception.
Does MDR mean a customer may be charged?
No. The Ministry of Finance says MDR is a merchant-ecosystem charge, not a charge on customers making UPI payments. The release says banks were advised to ensure merchants do not pass MDR on to customers, and prohibits UPI application providers from imposing platform fees or hidden charges. It also states that individuals must not be charged for sending or receiving money through UPI.
The same release distinguishes charges from transaction limits. Daily limits set by banks and NPCI—generally ₹1 lakh to ₹5 lakh depending on category—are security and risk-management controls, not thresholds at which a fee begins.
What the government says about who is affected
The Ministry of Finance’s 15 September 2026 release estimates that approximately 96% of P2M transactions are unaffected and about 4% of merchant transactions are subject to MDR. It also says P2P transactions account for 70% of total UPI transaction value and that 5% of total MDR collections will go to a dedicated small-merchant adoption fund. These are figures reported by the government release, not independent assessments of the policy’s effect on merchant prices.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What is confirmed about the 15 October date?
The September PIB release describes the MDR framework but does not state that it begins on 15 October 2026. An earlier Ministry of Finance PIB release, dated 8 August 2026, said a proposed Payment and Settlement Systems Act amendment would be an enabling provision and that, after Parliament passed the bill, the NPCI-headed UPI and Services Steering Committee would decide MDR, if any. The two releases do not establish 15 October as the operative date.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallThe NPCI circulars index is available at NPCI’s UPI circulars page, but the index itself does not establish an effective date without a relevant circular. For a payment or merchant account affected by implementation, check the applicable NPCI circular or government notification and ask the bank or acquiring provider how it classifies the transaction.
Quick Recap
Official sources
- Ministry of Finance, Government of India, PIB release, 15 September 2026 — announced MDR framework, customer protections and government estimates.
- Ministry of Finance, Government of India, PIB release, 8 August 2026 — described the proposed enabling amendment and committee role.
- NPCI UPI circulars index — consult for an operative circular confirming implementation details.
- Lok Sabha answer, August 2025 — historical context on the position at that time; it does not confirm the 2026 framework’s start date.
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