UPI merchant fee deferred till after Diwali: what it means
NPCI has put off the proposed 0.4% UPI merchant fee until after Diwali. Here is who would pay, what stays free, and how to protect your budget meanwhile.
If you read that UPI would start charging from 15 October 2026, here is the update: it didn't. On 13 October, NPCI said the proposed merchant fee is being put off until after Diwali. The new date hasn't been announced yet. Here's what that means for you in plain terms.
What was announced
NPCI's UPI and Services Steering Committee deferred the proposed merchant discount rate (MDR) on some UPI payments. In its post, NPCI said the fee would be implemented "immediately post Diwali" on a date to be notified separately. It cited the festive season as the reason.
This is a deferment, not a cancellation. The framework itself has not been withdrawn.
What the proposed fee looks like
As reported by several outlets, the plan is:
- 0.4% on specified person-to-merchant payments above ₹2,000, capped at ₹300 per transaction.
- A flat ₹5 on eligible payments above ₹2,000 in categories such as railways, telecom, insurance, fuel and agricultural inputs.
- 0.02%, capped at ₹300, for capital market payments.
- No fee on person-to-person transfers, merchant payments up to ₹2,000, and eligible small merchants, such as street vendors receiving up to ₹1 lakh a month through a UPI QR.
The Finance Ministry has said around 96% of merchant transactions would not be affected.
Worked examples
- ₹1,800 grocery bill: no fee.
- ₹5,000 restaurant bill: the restaurant would pay about ₹20.
- ₹50,000 laptop: the store would pay about ₹200.
- ₹6,000 sent to a friend: free, because it is P2P.
Who pays: you or the shop?
Under the framework, the merchant pays, not you. Reports say banks must make sure shops don't pass the charge on to customers, and UPI apps can't add platform fees or hidden charges. Because the fee is a cost to the shop, though, some sellers may still push cash for large bills. It's worth watching for that after the new date is announced.
Why this matters for your budget
Nothing changes in how you pay today. But the deferment is a good reminder that "free" digital payments depend on policy that can shift. A few sensible habits:
- Keep a note of any surcharge. If a shop adds a "convenience fee" for UPI, record it as its own line so you can see how much it adds up to.
- Check bills above ₹2,000 before you pay. Ask whether the price changes by payment mode.
- Don't rely on rumours. Messages claiming "UPI is now chargeable for everyone" are wrong. Check NPCI's official channels for the final date and rules.
Practical takeaway
- For now, pay as usual. P2P and small payments remain free.
- When the new date is notified, re-check which categories apply to you.
- If a merchant adds a fee, ask them to explain it, and keep the receipt.
This is general information, not financial advice.
How Dhuddu helps
If a surcharge ever shows up on your bills, it's easy to lose track of it. Dhuddu can read your Indian bank alerts and statements and sort your UPI spending by category, so extra fees stand out. You can try it free at dhuddu.in or on Google Play.