Modi Govt Announces UPI Charges Framework Starting October 15
The National Payments Corporation of India has officially released key operational details for the revised Merchant Discount Rate framework. Starting October 15, 2026, a 0.4% rate applies to select Person-to-Merchant UPI payments exceeding ₹2,000.
The government has implemented a strict cap of ₹300 for single payments reaching ₹75,000 or higher. Ordinary citizens and shoppers can breathe a sigh of relief. Everyday retail users will not face any extra transaction fees at billing counters.
| UPI Transaction Type | Applicable MDR Fee | Fee Capping Limit | Who Pays the Fee? |
| P2M (Above ₹2,000) | 0.4% | Capped at ₹300 | Merchant / Business |
| P2M (Up to ₹2,000) | 0.0% (Free) | No fee charged | Exempted |
| P2P (Person to Person) | 0.0% (Free) | No fee charged | Exempted |
| Small Merchants (P2PM) | 0.0% (Free) | Up to ₹1 Lakh/month | Exempted |
| Utilities, Fuel, Insurance | Flat ₹5 | Fixed fee above ₹2,000 | Merchant / Business |
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Understanding Who Will Pay and Who Remains Fully Exempt
The new framework focuses exclusively on commercial transactions above the specified threshold. Small vendors and corner shops under the P2PM tier receive complete protection. Merchants collecting up to ₹1 lakh per month through standard QR codes will continue enjoying zero charges.
Person-to-Person money transfers between friends, family members, or self-accounts remain completely free without monthly caps. Specific essential utility services including electricity, gas, fuel, insurance, and telecom will operate under a reduced flat ₹5 fee above ₹2,000.
| Payment Category | Value Threshold | Applicable MDR Rate | Fee Burden Details |
| Standard Commercial Purchase | Below ₹2,000 | 0.0% | Zero fee across all channels |
| Standard Commercial Purchase | Above ₹2,000 | 0.4% | Deducted from merchant account |
| High-Value Retail Payment | ₹75,000 and above | Maximum ₹300 | Absolute ceiling per transaction |
| Special Utilities & Fuel | Above ₹2,000 | Flat ₹5 | Protects essential services |
| Capital Markets & Mutual Funds | Above ₹2,000 | 0.02% | Max ₹300 cap applies |
Record Transaction Volumes Drive Essential Infrastructure Funding
The regulatory update follows unprecedented scaling across India’s premier real-time payment network. NPCI records show UPI processed 2,451 crore transactions worth nearly ₹30 lakh crore in August 2026 alone.
Operating servers, scaling cybersecurity defenses, and maintaining bank integration pipelines require continuous investments. The official statement clarifies that collected funds will stay within payment ecosystems. Funds will directly upgrade infrastructure resilience and customer security measures.
| Operating Metric | August 2026 Volume & Value Data |
| Total Monthly Transactions | 2,451 Crore (24.51 Billion) |
| Total Transaction Value | Nearly ₹30 Lakh Crore (₹29.9 Trillion) |
| Everyday Micro-Payments | Over 95% of total P2M transactions remain under ₹2,000 |
| Ecosystem Cost Recovery | Replaces annual government subsidy dependencies |