For many small businesses in India, a merchant UPI QR is a low-friction way to take in-person payments, but it is not accurate to assume every merchant UPI transaction is always free. A Ministry of Finance announcement dated 15 September 2026 describes zero-MDR protections for specified transactions and merchants, alongside MDR for certain higher-value merchant payments. Cards, net banking and payment links have provider-specific costs, so compare the full terms of the route you will actually use.
What changed in UPI fees, and who is covered?
The Ministry of Finance / Press Information Bureau said on 15 September 2026 that person-to-person UPI remains free. For merchant payments, it described these categories:
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- Payments up to ₹2,000: merchant payments remain free of MDR under the announcement.
- Eligible small merchants using UPI QR: merchants in the P2PM category receiving up to ₹1 lakh per month through UPI QR continue to have zero MDR on all transactions.
- Specified P2M payments above ₹2,000: MDR is 0.4%, capped at ₹300 per transaction for transactions of ₹75,000 and above.
- Listed essential sectors: a flat ₹5 MDR applies to transactions above ₹2,000 in sectors including railways, telecom, insurance, fuel and agricultural inputs.
- Listed capital-market transactions: MDR is 0.02%, capped at ₹300.
These are the categories and rates in the government’s announcement, not a guarantee that every merchant or QR arrangement is classified the same way. Confirm your merchant category, QR classification and current implementation with your bank or payment provider, and check for later official changes. Read the 15 September 2026 PIB release.
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The release says MDR is a charge within the merchant payment ecosystem, not a customer charge, and that banks have been advised to ensure merchants do not pass it on. It estimates that approximately 96% of P2M transactions remain unaffected and about 4% of merchant transactions attract MDR; those percentages are government estimates, not independent measurements. It also says P2P UPI represents 70% of total transaction value and remains outside the announced MDR framework.
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How the four collection options compare
| Method | Best fit | Costs to check | Main trade-off |
|---|---|---|---|
| UPI merchant QR | In-person counter sales | Merchant category and QR classification; transaction amount; monthly QR receipts; any aggregator service charge | Convenient for customers who use UPI, but the merchant must display and use its own correctly configured QR. |
| Cards | Online checkout or in-person sales where customers want credit, debit or card rewards | Acquirer or gateway rate by card type; GST; terminal or service fees; refund and dispute costs; special card categories | Useful to customers who prefer cards or want credit, but merchant pricing depends on the provider and contract. |
| Net banking | Online checkout for customers who prefer a bank login or transfer flow | Gateway rate; supported banks; settlement and refund terms | An alternative at checkout, with the customer journey dependent on their bank and the gateway integration. |
| Payment link | Remote orders, invoices and payment requests sent by messaging, email or SMS | Provider fee for the underlying payment method; GST; settlement; refund and dispute terms; feature limits | Easy to share without a full website checkout, but customers still need to complete the provider’s checkout flow. |
Why the cheapest route depends on the workflow
For counter sales
A direct merchant UPI QR can be a practical option when customers commonly pay by UPI and your business qualifies for the relevant zero-MDR treatment. Check whether your QR is direct or provided through an aggregator, because a provider’s service or technology fee can affect your total cost even where network MDR is zero. A QR standee is simply a way to display your existing merchant QR at the counter; it is not a payment service or a requirement for taking payment.
For online or remote sales
Cards and net banking may suit customers who want those checkout options. A payment link can serve a different operational need: it lets you send a request to a customer who is not standing at a checkout. It is a collection workflow rather than a separate payment rail; the fee and customer experience depend on whether the buyer pays by UPI, card, net banking or another supported method.
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Gateway fees: zero MDR does not always mean zero cost
Razorpay’s pricing page, accessed 4 October 2026, lists a standard transaction fee of 2% plus applicable GST across cards, UPI, wallets and net banking, with no setup fee or annual maintenance charge under that stated plan. It separately says standard bank-to-bank UPI and RuPay debit have zero MDR while a gateway platform or technology fee still applies. This is one provider’s published standard pricing, not an industry-wide rate; negotiated, merchant-specific or promotional terms may differ. See Razorpay’s published pricing.
The same page describes settlement as typically T+1 or instant and says optional services such as instant settlement have separate pricing. Ask what settlement timing applies to your account and whether faster payout carries an additional charge. For historical context, an RBI report records that from 1 January 2020 MDR was not to be collected on UPI and RuPay debit transactions, and savings-account holders were not to be charged for online-initiated NEFT transfers. That older position should not be used on its own to describe the 2026 UPI announcement. Read the RBI report.
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What payment links do—and what they do not change
A payment link lets a business share a payment request with a customer through channels such as WhatsApp, email or SMS, without needing a conventional website checkout. Razorpay says its payment collection suite supports cards, net banking, UPI and wallets through this workflow. The link does not make all payment methods cost the same: check the provider’s fee for each underlying method, along with settlement, refund and dispute terms. See Razorpay’s payment-link information.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to compare actual offers
Ask each bank, acquirer or gateway for its current written terms for your business and compare the total cost for the same transaction mix. Include:
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- Accepts magstripe credit card payments, including those from Visa, Mastercard, Discover and American Express (fees apply).
- App sends deposits to your bank account within 1 to 2 business days, or enjoy instant deposits (fees apply).
- Percentage fees, fixed charges and GST.
- Settlement timing and any optional instant-settlement fee.
- Supported payment methods, card types and banks.
- Refund and chargeback or dispute fees.
- Reconciliation and reporting tools.
- Evidence for payment success and uptime, rather than relying on vendor claims alone.
- Customer effort and whether the payment happens at a counter or remotely.
No single route is cheapest for every transaction. For a shop counter, compare the real cost and eligibility of your merchant QR setup; for remote orders, compare the provider’s fee by payment method and the convenience of sending a link. For cards and net banking, rely on your actual offer rather than a generic headline rate.
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