India’s National Payments Corporation of India announced merchant charges for selected Unified Payments Interface transactions on 15 September. Qualifying payments above ₹2,000 will attract a 0.4% fee from 15 October 2026. The charge is capped at ₹300 per transaction and is payable by merchants.
The change follows a zero-MDR regime for UPI introduced in January 2020. The government has subsidised some low-value merchant payments to support adoption. The Indian Express reported that payment providers had sought a commercial revenue stream to meet infrastructure and settlement costs.
SMALL MERCHANTS AND SECTOR EXEMPTIONS
Payments of ₹2,000 or less remain exempt. Eligible micro-merchants under the P2PM classification also retain zero charges, covering small vendors receiving up to ₹100,000 monthly through UPI QR codes.
Different tariffs apply to specified sectors. NPCI’s framework sets a ₹5 flat charge for designated categories and a 0.02% rate for capital-market payments, while person-to-person transfers remain free.
FUNDING PAYMENT INFRASTRUCTURE
NPCI said the revenue would support infrastructure, cybersecurity and customer service. The Indian Express reported that 5% of collections would support a dedicated fund to expand small-merchant acceptance.
The immediate implementation milestone is 15 October, when banks and payment providers must apply the new thresholds and classifications. The finance ministry said banks have been advised to ensure that merchants do not pass the charge on to customers.