NPCI sets transaction-based fee structure; UPI payments will remain free for consumers
TFP Bureau,New Delhi, September 17, 2026: Person-to-merchant (P2M) transactions made through the Unified Payments Interface (UPI) will attract a Merchant Discount Rate (MDR) of up to 0.4% from October 15, according to the new fee structure issued by the National Payments Corporation of India (NPCI).
The revised charges will apply to eligible merchant transactions above ₹2,000. UPI payments made by consumers will continue to remain free of charge.
Under the new structure, transactions of up to ₹2,000 will attract no MDR. For a payment of ₹3,000, the MDR at 0.4% would amount to ₹12, while a ₹50,000 transaction would attract a charge of ₹200. For transactions of ₹75,000 or more, the fee will be capped at ₹300.
A fixed fee of ₹5 will apply to transactions above ₹2,000 in specified sectors, including railways, telecom services, insurance and fuel.
The new fee structure is aimed at supporting the digital payments ecosystem, including investments in cybersecurity, innovation and customer service.
Small businesses in specified categories will remain outside the MDR framework.
A separate MDR of 0.02%, subject to a maximum of ₹300, will apply to UPI transactions involving mutual funds, securities and stockbrokers.
The revised charges are applicable to merchant transactions and will not change the existing arrangement under which UPI remains free for consumers. By comparison, MDRs for other digital payment instruments can be significantly higher, with credit-card transactions generally attracting charges of 1.5% to 2.5% and debit-card transactions up to 0.90%.
The new structure is expected to alter the cost framework for eligible merchant-side UPI transactions while retaining zero charges for consumers using UPI for payments.
