Govt In Talks With Payment Aggregators To Keep UPI Fee Off Customers: Sources

Last Updated:September 18, 2026, 05:27 IST

Sources said the ministry has already started engaging payment aggregators and other participants in the UPI ecosystem to sensitise them about the MDR.

Under the new rules, a 0.4 per cent MDR will apply from October 15 to person-to-merchant UPI transactions above Rs 2,000. (AI image)

The central government has begun discussions with payment aggregators and other stakeholders in the Unified Payments Interface (UPI) ecosystem to ensure that the newly introduced Merchant Discount Rate (MDR) is not passed on to customers, sources said on Thursday.

The Finance Ministry is also preparing a monitoring mechanism to check that merchants do not shift the burden of the fee to consumers, amid concerns that the new charge could increase costs for people using UPI for large payments, PTI reported.

Under the new rules, a 0.4 per cent MDR will apply from October 15 to person-to-merchant UPI transactions above Rs 2,000. The fee will be paid by merchants and not customers, with the charge capped at Rs 300 for transactions of Rs 75,000 or more.

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What is the new UPI Merchant Discount Rate and when does it take effect?

Starting October 15, a 0.4 percent Merchant Discount Rate (MDR) will apply to person-to-merchant UPI transactions above Rs 2,000. This fee is capped at Rs 300 for transactions of Rs 75,000 or more.

Will customers have to pay the new UPI transaction fee?

No, the newly introduced fee is to be paid by merchants and not customers. The central government is actively holding discussions with payment aggregators and other stakeholders to ensure this fee is not passed on to consumers. Additionally, the Finance Ministry is preparing a monitoring mechanism to prevent merchants from shifting this cost burden to customers.

Which law did the government amend to allow charges on UPI transactions?

The government proposed and passed amendments to the Payment and Settlement Systems (PSS) Act, 2007. Previously, this law prohibited levying charges on digital payment systems like UPI and RuPay debit cards, but the new legislative changes empower the government to allow banks and service providers to levy these charges.

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