If you take UPI payments at a shop counter, an online store, a clinic desk or a school fee window, the cost of those payments changes this month. From 15 October 2026 some UPI payments to merchants carry a fee. Most still do not. Ten minutes with your own numbers will tell you which side you are on.
What changed, and from when
NPCI has set a Merchant Discount Rate on selected person-to-merchant UPI payments. MDR is the small fee a merchant pays its own bank for accepting a digital payment. Cards have always had one; UPI did not. The new rates apply from 15 October 2026.
- Merchant payments above ₹2,000: 0.4%, paid by the merchant.
- Payments of ₹75,000 and above: capped at ₹300 per payment.
- Railways, telecom, insurance, fuel and agricultural inputs: a flat ₹5 per payment above ₹2,000.
- Mutual funds, securities, stockbrokers and dealers: 0.02%, capped at ₹300.
The Ministry of Finance has clarified that this is not a tax. The money is shared among banks, payment service providers and UPI apps to run and expand the system.
Who is not affected
- Money sent between two people stays free, whatever the amount.
- Any merchant payment up to ₹2,000 stays free.
- Small merchants in the P2PM category, who receive up to ₹1 lakh a month through a UPI QR code, continue at zero MDR on every payment.
The Ministry of Finance says about 96% of merchant payments are untouched. One more rule matters: you cannot add a UPI charge to the customer's bill. The customer pays the listed price and nothing more.
What to check this week
- Take three months of UPI collections and add up only the payments above ₹2,000. Roughly 0.4% of that total is your new monthly cost. A tailoring shop whose bills are mostly below ₹2,000 may see almost nothing. A hospital or a machinery dealer billing ₹20,000 at a time will see a line worth watching.
- Ask your bank, or the payment company that handles your online collections, in writing which category your account sits in and what rate they will apply from 15 October. Ask what happens if your QR collections cross ₹1 lakh in a month.
- Remove any sign or checkout line that adds a percentage for paying by UPI. That is not allowed.
- Fix your books before the deductions start. On larger payments, the amount credited to your bank will no longer match the amount you billed. If nobody records that gap, your accounts drift quietly for months.
How we can help
The accounting side is where this bites. Kanakku reads your bank statement, matches each credit to the right invoice and keeps the deduction as its own entry, so your reports still add up after 15 October. If you sell on WhatsApp or Instagram, Shoppyti gives buyers a proper store and order link, so you can see your own payment mix instead of guessing it. If you want a second pair of eyes on your collections before the date, talk to us.
