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, including those 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. NPCI’s guidance prohibits passing the merchant charge to customers.