New UPI transaction charges 2026: the new rules explained simply

For most people, no. The new UPI transaction charges announced in September 2026 are a merchant discount rate (MDR), a fee that a business pays its bank or payment provider to accept a payment. It is not a fee deducted from the person paying.

The government has also said clearly that consumers should not face UPI transaction charges and that person-to-person transfers remain free. If you are wondering what MDR actually is, we have a separate plain-language guide.

NPCI's framework has four parts. Rate: 0.4% of the transaction value. Threshold: only merchant payments above ₹2,000 are covered. Cap: MDR cannot exceed ₹300 per transaction, which works out to payments of ₹75,000 and above. Start date: October 15, 2026.

The rule applies to specified person-to-merchant (P2M) categories. Which merchants fall inside the specified list is decided under NPCI's framework and the arrangements between merchants and their payment providers.

The merchant pays. When a customer pays ₹10,000 to a covered merchant, the customer's account is debited exactly ₹10,000. The merchant's provider deducts ₹40 (0.4%) before settling the money. We break this down further in UPI merchant charges: who pays.

Consumers paying for anything with UPI. Anyone sending money to a friend, family member or any individual. Merchants receiving payments of ₹2,000 or less per transaction. Merchants outside the specified categories.

₹1,500 at a grocery store: below the threshold, no MDR. ₹10,000 at an electronics store (specified merchant): ₹40 MDR paid by the store. ₹1,00,000 for furniture (specified merchant): capped at ₹300. ₹25,000 sent to your brother: P2P, free. Try your own amount in the UPI MDR calculator.

No. Charges and limits are separate rules. The standard UPI transaction limit per day remains ₹1 lakh for most payments, with higher category-specific caps set by NPCI.

If you pay with UPI, nothing changes for you. If you run a business in a specified category and take payments above ₹2,000, budget for 0.4% (max ₹300) per transaction from October 15, 2026.