India ends merchant UPI 0-fee above ₹2,000, redirects 5% MDR
Business
Big update for digital payments in India, government officials say the current rewards for using BHIM-UPI and RuPay debit cards are on their way out.
Instead, a slice of the transaction fees (5% of MDR collections) will go toward helping small businesses get on board with digital payments.
This shift comes as the government rolls out new pricing for certain merchant UPI transactions above ₹2,000, ending the zero-fee era for those transactions.
UPI merchant fee starts Oct 15
From October 15, 2026, you'll pay a 0.4% fee (capped at ₹300) if you use UPI to pay a merchant over ₹2,000; smaller transactions and person-to-person transfers stay free.
Some sectors, like insurance and capital markets, will see different rates.
Plus, the BHIM app is likely to be revamped and relaunched.