UPI Charges Starting October 15: What You Need to Know Before Paying

Viral forwards claim UPI users will be charged from October 15. With festive sales and campus purchases peaking, here’s what actually changes and what doesn’t. Students, parents and job seekers can avoid surprise fees by knowing the new rules, who pays MDR, and how to report illegal surcharges.

From October 15, 2026, a 0.4 percent Merchant Discount Rate applies on select person‑to‑merchant UPI payments above ₹2,000. The fee is paid by merchants, capped at ₹300 per transaction from ₹75,000 upward. Peer‑to‑peer transfers remain free. Small P2PM vendors up to ₹1 lakh monthly stay exempt. Apps cannot levy platform fees on users.

UPI charges: What exactly changes on October 15?

The change targets higher‑value merchant payments, not daily student spends. Example: a ₹5,000 eligible payment creates ₹20 MDR; ₹50,000 creates ₹200. The cap is ₹300 for payments of ₹75,000 and above. NPCI says the framework funds uptime, cybersecurity and dispute handling, while everyday QR usage stays free for consumers.

UPI charges: Who pays MDR, and can shops add surcharges?

MDR is a merchant acceptance cost, settled between the merchant’s bank, app, and networks. Consumers should not be charged extra for scanning a UPI QR. Government FAQs and clarifications state merchants cannot pass MDR to customers as a “UPI surcharge” at checkout or on invoices. Report attempts immediately.

UPI charges: Are P2P transfers and small vendors affected?

Your P2P transfers, hostel splits, and rent shares stay free at any value. Small merchants using P2PM accounts, including street vendors, remain zero‑MDR up to ₹1 lakh receipts each month. Daily limits set by banks, typically ₹1–5 lakh, are security caps, not fee thresholds for users.

UPI charges: GST, platform fees and what hits your pocket

GST at 18 percent applies on the MDR fee to merchants, not on your transfer value. Registered businesses can usually claim input tax credit against that GST. UPI apps are barred from adding platform or convenience fees to consumer UPI payments under the new framework. Watch invoices for any disguised add‑ons.

UPI charges: How to report illegal UPI surcharging fast

First, ask the shop for a bill showing the surcharge line. Pay using another method if needed. Raise a complaint in your app or bank. Escalate on NPCI’s complaint portal, then file at RBI’s Ombudsman CMS if unresolved. You can also contact the National Consumer Helpline.

For festive sale days, keep P2P on UPI, and don’t accept “UPI surcharge” signs. For large purchases, compare net discounts across cards and UPI before paying. Splitting bills to dodge MDR isn’t your responsibility. Note the effective date, October 15, 2026, and save complaint links for quick escalation.