Starting October 15, 2026, the National Payments Corporation of India (NPCI) is rolling out a revised Merchant Discount Rate (MDR) framework that introduces a 0.4 percent fee on Person-to-Merchant (P2M) UPI transactions exceeding Rs 2,000. It is important to note that this charge is strictly for merchants; consumers will continue to enjoy the convenience of free UPI payments as they always have. The fee is capped at a maximum of Rs 300 per transaction, ensuring that large-value payments remain cost-effective while supporting the infrastructure behind India's digital payment ecosystem.

The update focuses on scaling the network and improving security, though it remains highly inclusive for smaller players. Specifically, transactions under Rs 2,000, Person-to-Person (P2P) transfers, and payments to small vendors under the P2PM category—those receiving up to Rs 100,000 monthly—remain completely exempt from these fees. Meanwhile, sectors like fuel, telecom, and railways will see a flat fee of Rs 5 for high-value transactions. By maintaining free access for the vast majority of daily transactions, which account for over 95 percent of UPI volume, the NPCI aims to balance the sustainability of digital payments with the continued growth of small businesses across India.