UPI Fees From October 15? What the Proposed MDR Means for You and Shopkeepers
UPI has been free for users for years. A proposed Merchant Discount Rate (MDR) due from October 15, 2026 is now worrying traders. Here is what has been reported, and what it means for ordinary people.
First, the numbers on UPI
According to NPCI data reported by Mint on October 1, UPI handled 24.07 billion transactions in September 2026, down 1.8% from 24.51 billion in August but up 23% from a year earlier. Total value was Rs 29.37 lakh crore, up 18% year on year. That works out to about 802 million transactions a day.
What is MDR?
MDR is a fee a merchant pays to accept a digital payment. Shoppers do not see it. It is taken from the merchant's side of the transaction.
What is proposed
As reported by Mint, the revised framework is tiered:
- Person-to-person (P2P) payments: no fee, whatever the amount.
- Person-to-merchant (P2M) payments up to Rs 2,000: no fee. This covers most everyday purchases.
- Small merchants: exempt if their collections stay below Rs 1 lakh a month for three consecutive months.
- P2M payments above Rs 2,000: standard MDR of 0.4%, capped at Rs 300. The cap applies from Rs 75,000 upward.
- Utilities, telecom, insurance, fuel, railways and education: a flat Rs 5 for payments above Rs 2,000.
- Mutual fund and stock brokerage payments: 0.02%, capped at Rs 300.
Why traders are worried
Traders' groups raised concerns about the 0.4% fee on payments above Rs 2,000. Mint reports that a delegation led by the Confederation of All India Traders met Finance Minister Nirmala Sitharaman on Wednesday, and that two retail bodies withdrew their call for a "No UPI Day" protest on October 2 after being assured their concerns would be considered.
What it means for you
Based on the reported framework, sending money to friends and paying small bills at shops should stay free. A merchant who gets a large payment may pay a fee, and some may pass it on in prices, but that is a business decision and not part of the framework. Details could still change before October 15.
Sources
- Mint, "UPI hits 24 billion transactions in September; NPCI data shows 1.8% monthly dip amid MDR concerns", October 1, 2026: https://www.livemint.com/money/upi-hits-24-billion-transactions-in-september-npci-data-shows-1-8-monthly-dip-amid-mdr-concerns-11790847660336.html
Facts checked: October 2, 2026.