UPI charges for merchants in 2026: who pays, how much, and from when
In September 2026 the government announced a fee on some UPI payments to businesses. Most shops will never pay it. This guide sets out who does, how much, and what the start date is, from the Finance Ministry's own words.
Customers never pay to use UPI. Merchants pay nothing on payments up to ₹2,000, and small merchants receiving up to ₹1 lakh a month through a UPI QR code pay nothing at all. Above ₹2,000, other merchants pay 0.4%, capped at ₹300, or a flat ₹5 in railways, telecom, insurance, fuel and farm inputs. The start was moved to after Diwali 2026, date not yet set.
Pay via UPI button on Pro, ₹299/year · money goes straight to your bank · no cut taken
Who pays what under the new UPI fee
The fee is a merchant discount rate (MDR): a charge on the business that receives a payment, never on the person paying. It applies only to payments made to merchants, only above ₹2,000, and not to small merchants on NPCI's P2PM category. Everything else on UPI stays free.
Every row below is from the Ministry of Finance release of 15 September 2026 or the NPCI FAQ published with it, read on 24 October 2026. This guide is part of our guides to UPI payments for businesses.
| Payment | Fee | Note |
|---|---|---|
| Person to person, any amount (family, friends, self) | FeeFree | NoteFor sender and receiver |
| Customer paying any merchant | FeeFree for the customer | NoteNo platform fee allowed in UPI apps |
| Merchant payment of ₹2,000 or less | FeeFree | NoteOver 95% of merchant payments by volume, per the FAQ |
| Small merchant on P2PM: up to ₹1 lakh a month by UPI QR | FeeFree on every payment | NoteStreet vendors and neighbourhood shops |
| Merchant payment above ₹2,000 | Fee0.4% of the payment | NoteCapped at ₹300 from ₹75,000 |
| Railways, telecom, insurance, fuel, agricultural inputs, above ₹2,000 | FeeFlat ₹5 | NoteUtility bills too, per the FAQ |
| Mutual funds, securities, brokers and dealers | Fee0.02% | NoteCapped at ₹300 |
| UPI AutoPay (mandates for bills, subscriptions, SIPs) | FeeNo prescribed MDR | NoteFAQ question 22 |
| RuPay credit card or credit line on UPI | FeeSeparate credit rules | NoteNot part of this framework (question 36) |
Where the money goes. The Ministry says the fee is neither a tax nor a charge collected by the government or NPCI. It is shared between the banks, payment service providers and UPI apps that carry the payment, and 5% of all of it goes into a fund to bring more small merchants onto UPI.
Why now. UPI has been free for merchants since 1 January 2020. The FAQ says running it costs the industry an estimated ₹20,000 crore a year, and that government subsidies were meant as a short-term bridge, not a permanent arrangement.
What will the UPI fee cost your business?
Enter a typical payment and how many of that size you take in a month. The calculator applies the framework's rules: nothing up to ₹2,000, then 0.4% capped at ₹300, or the flat or concessional rate for your sector. It runs in your browser and sends nothing anywhere.
The fee starts on the date NPCI notifies; until then UPI payments to merchants carry no MDR. Rates are the ones announced on 15 September 2026, and the credit card range is question 4 of the FAQ. The calculator rounds to the paisa and does not model the education sector, whose rate above ₹2,000 the FAQ describes only as "flat-fee structures or capped processing rates".
Are you a small merchant? The ₹1 lakh P2PM line
If customers pay you by scanning a UPI QR code into your own personal bank account, and you receive up to ₹1 lakh a month that way, you are in NPCI's P2PM category and pay nothing on any payment. Cross ₹1 lakh for three months in a row and your bank moves you to the merchant category.
Person to person
Money between individuals: family, friends, your own accounts. Free at any amount, for both sides.
Person to person merchant
A small vendor paid by QR into a personal account. The FAQ calls it a category "created by NPCI to support small vendors". Zero fee up to ₹1 lakh a month.
Person to merchant
A business with a merchant UPI account from a bank or payment company. Free up to ₹2,000 a payment, then the fee.
The FAQ is specific about the move between categories: banks use a "transaction velocity check" on P2PM merchants, and a merchant whose UPI receipts pass ₹1 lakh a month for three consecutive months is moved to the merchant (P2M) category. A single busy month does not do it.
The same FAQ says that receiving one payment above ₹2,000 does not create a charge for a merchant in an exempted tier like P2PM: "MDR applicability is determined by overall merchant account categorisation". Existing QR codes, stands and soundboxes keep working; nothing has to be replaced.
Whether a personal account suits your business at all, and the daily limits on each kind of account, are in UPI business account vs personal UPI.
When do UPI charges start? The dates so far
UPI payments to merchants have carried no fee since 1 January 2020. The new framework was announced on 15 September 2026 for a start on 15 October. Two days before that, NPCI moved it to "immediately post Diwali on a date to be notified separately". As of 24 October 2026 that date had not been announced.
2020. The Income Tax Department's notice quotes Circular 32/2019 of 30 December 2019: "any charge including the MDR (Merchant Discount Rate) shall not be applicable on or after 01st January, 2020" on payments through the prescribed modes, which are RuPay debit cards, BHIM-UPI and the BHIM-UPI QR code.
15 September 2026. The Ministry of Finance announced the framework under the Payment and Settlement Systems Act, 2007, after deliberations by the UPI Steering Committee. NPCI's FAQ, dated the same day, gave 15 October 2026 as the start.
13 October 2026. PTI reported that NPCI's UPI and Services Steering Committee deferred the fee, which "shall be implemented immediately post Diwali on a date to be notified separately", and that no new date was given. We will update this page when one is.
UPI through a payment gateway is not the same as UPI to your bank
The new fee is charged by the banks and apps that carry a UPI payment. A payment gateway is a separate service with its own price, and some charge on UPI even while the MDR is zero. A UPI QR code or a Pay via UPI button that pays your bank directly has no gateway in the middle.
Through a gateway
Razorpay's own pricing page says there is zero MDR on standard bank-to-bank UPI, and then that "a standard platform or technology fee of 2% will be applied" [source] for its dashboard, reports and infrastructure (read on 24 October 2026). What you pay is the gateway's price, plus any MDR once it starts.
Straight to your bank
A UPI QR code at the counter, a UPI payment link, or the Pay via UPI button on a Beeps profile opens the customer's UPI app with your UPI ID filled in. No gateway sits in between, and Beeps takes no fee or cut. Once the framework starts, your account's category decides any MDR, exactly as for any other QR code.
A gateway earns its fee when you need cards, net banking and wallets as well as UPI, automatic receipts, or checkout on a website. UPI QR vs payment link vs payment gateway sets the three side by side, with a chooser.
What to do before the UPI fee starts
Find out which category your UPI ID is in, look at three months of receipts, and work out what the fee would be on your larger payments. Do not add a UPI charge to bills: the rules forbid passing the fee to customers. Most small businesses will find the answer is nothing.
Ask which category your UPI ID is in
Your bank or payment app can tell you whether your QR is a personal (P2P), small-merchant (P2PM) or merchant (P2M) account. That one answer decides most of this page.
Add up three months of UPI receipts
The ₹1 lakh line is per month, and the move to the merchant category takes three months in a row above it.
Look at payments above ₹2,000 only
Those are the only ones that can carry a fee. Run your typical large payment through the calculator above.
Keep prices as they are
A "UPI charge" line on a bill is not allowed. If a fee does apply, it is a cost of the business, like a card machine's.
Watch for the start date
NPCI and PIB will announce it. Until then, every UPI payment to a merchant still carries no MDR.
UPI merchant charges: questions
Will customers be charged for paying by UPI?
No. The Ministry of Finance says no transaction fee, platform fee or other charge may be imposed on individuals for sending or receiving money through UPI, and that the merchant fee is not a charge on customers. Paying a shop, a doctor or a friend by UPI stays free for the person paying.
Is UPI still free for small shops?
Yes, for two groups. Every merchant pays nothing on payments of ₹2,000 or less. And small merchants receiving up to ₹1 lakh a month through a UPI QR code into their own account, the P2PM category, pay nothing on any payment, whatever its size.
Sources: Press Information Bureau, Ministry of Finance, NPCI, published by the Department of Financial Services
When do the new UPI merchant charges start?
They were due on 15 October 2026. On 13 October NPCI said the fee would start immediately after Diwali, on a date to be notified separately. As of 24 October 2026 no date had been announced, so check NPCI or PIB before you change your prices.
Sources: PTI, via ThePrint, NPCI, published by the Department of Financial Services
Can I add a UPI charge to the customer's bill?
No. The FAQ says merchants cannot pass the fee on to customers, and the Ministry says banks have been told to make sure they do not. The customer pays the listed price.
Sources: NPCI, published by the Department of Financial Services, Press Information Bureau, Ministry of Finance
Does the fee apply to money sent to my personal UPI ID?
Person-to-person payments stay free at any amount. If you take business payments on a QR code into your own account, you are likely in the P2PM category, which stays at zero up to ₹1 lakh a month. The FAQ says a P2PM merchant who receives more than ₹1 lakh a month for three months in a row is moved to the merchant category, where the fee applies above ₹2,000.
Sources: NPCI, published by the Department of Financial Services, Press Information Bureau, Ministry of Finance
Does Beeps Card take a cut of UPI payments?
No. The Pay via UPI button on a Beeps profile opens the customer's own UPI app with your UPI ID filled in, and the money goes straight to your bank. Beeps never holds it and takes no fee. The button is on the Pro plan, ₹299 a year. Any bank fee under the 2026 framework depends on your account's category, exactly as it would for a printed QR code.
Sources
Facts about other companies and the wider market come from the pages below, as published by them. Each was read on the date shown. Beeps Card prices come from our own pricing page.
- Press Information Bureau, Ministry of Finance, UPI Continues to Remain Free for Peer to Peer Transactions and 96% of Merchant Transactions (15 September 2026). Checked .
- NPCI, published by the Department of Financial Services, Merchant Discount Rate (MDR) on Select UPI (P2M) Transactions - FAQs, 15 September 2026. Checked .
- PTI, via ThePrint, NPCI defers levy of MDR on UPI transactions; no new date announced for implementation (13 October 2026). Checked .
- Income Tax Department, Notice on acceptance of payment through prescribed electronic modes under section 269SU (quoting Circular 32/2019). Checked .
- Razorpay, source page. Checked .