Many shop owners saw news about a new 0.4% fee on UPI payments above ₹2,000 and started worrying about their margins. Here is what NPCI actually decided, who pays it, which payments are covered, and why nothing has changed at your counter yet.
Key takeaway: The 0.4% fee was due on 15 October 2026, but NPCI has deferred it until after Diwali. No new date has been announced. Customer-to-customer (P2P) transfers stay free.
What did NPCI decide?
NPCI announced a merchant discount rate (MDR) of 0.4% on select person-to-merchant (P2M) UPI payments above ₹2,000. On 13 October 2026, two days before the start date, its UPI and Services Steering Committee postponed it, citing the festive season. NPCI says it will announce the new date separately.
Who pays the fee?
As reported, the fee is paid by the merchant, not the customer. Your customer still pays the bill amount through UPI as usual.
How much would it cost you?
| Payment received | Fee at 0.4% |
|---|---|
| ₹1,500 | ₹0 (up to ₹2,000 is outside the fee) |
| ₹5,000 | ₹20 |
| ₹10,000 | ₹40 |
| ₹50,000 | ₹200 |
| ₹75,000 and above | Reported cap of ₹300 |
Which payments are NOT covered?
- P2P transfers — sending money to family or friends stays free.
- Merchant payments up to ₹2,000. NPCI says more than 95% of UPI merchant transactions by volume are below this level.
- Small merchants on the P2PM (person-to-small-merchant) route are reported to be protected, subject to eligibility conditions.
- Some sectors are reported to have different rates, such as a flat ₹5 for railways, telecom, insurance, fuel and agricultural inputs.
NPCI has not yet published the final rules for every category. Treat the cap and exemptions as reported, not final.
What should a shop owner do now?
- Don't change prices or refuse UPI. The fee is not in effect.
- Know your numbers. Check how many of your UPI receipts are above ₹2,000 in a month. That tells you the real cost if the fee starts.
- Ask your bank or payment provider whether your QR is a small-merchant (P2PM) or regular merchant QR.
- Watch for the new date on NPCI's website after Diwali.
Track UPI receipts in DAM
To see how much comes in through UPI versus cash:
- Open Search and type Receive Money.
- Enter the amount and use Add Payment Mode to pick where it came in — your Bank Account (for UPI) or Cash in Hand.
- Search Day Book to review all receipts and spot how many large UPI payments you get.
Know your UPI vs cash in one view
Record every receipt and see your real numbers before any fee starts.
Frequently Asked Questions
Is the 0.4% UPI fee in effect now?
No. It was planned for 15 October 2026 and has been deferred until after Diwali. NPCI will announce the new date.
Will customers pay extra?
As reported, the fee is charged to the merchant, not the customer.
Do I pay the fee on a ₹1,500 UPI payment?
No. Merchant payments up to ₹2,000 are outside the fee.
Is sending money to a friend charged?
No. Person-to-person (P2P) UPI transfers stay free.
Sources
Content checked on 17 October 2026. The Week: NPCI defers UPI MDR until after Diwali · DSIJ: UPI MDR rollout deferred · NPCI.
Disclaimer: This guide is for educational purposes only and does not constitute formal financial or legal advice. Final charges depend on NPCI's official circular and your bank or payment provider.