Will I be charged for UPI payments above ₹2,000 from 15 October 2026?

Short answer: no. As the person paying, you won't be charged. The new 0.4% fee (called MDR, merchant discount rate) is paid by the merchant, not the customer.

What stays completely free

• Sending money to a person (P2P), any amount: family, friends, splitting bills, moving money between your own accounts. No transaction fee, platform fee or other charge is allowed.
• Paying a merchant ₹2,000 or less. No MDR at all.
• Paying small shops and street vendors in the small-merchant category (P2PM: up to ₹1 lakh a month received through UPI QR). They pay zero MDR on every payment, even above ₹2,000.
• No limit on free use. There are no monthly quotas or caps on free UPI payments. The daily limits you see (generally ₹1 lakh to ₹5 lakh) are security limits, not charging thresholds.

What the merchant pays from 15 October, on payments above ₹2,000

• Most merchants: 0.4% of the payment. That's ₹12 on ₹3,000 and ₹200 on ₹50,000. It's capped at ₹300 for payments of ₹75,000 and above.
• Railways, telecom, insurance, fuel and farm inputs: a flat ₹5 per payment.
• Mutual funds, stockbrokers and securities: 0.02%, capped at ₹300.

Can a shop add the fee to my bill?

No. Banks have been told to make sure merchants don't pass the MDR on to customers, and UPI apps are barred from charging platform fees or hidden charges. You should pay only the displayed price. If a shop or app charges you extra for paying by UPI, raise it through your UPI app's help section first. If that doesn't fix it, you can escalate to NPCI and then the RBI Ombudsman (cms.rbi.org.in).

If you run a shop

• If you're in the small-merchant (P2PM) category, you pay nothing, even on payments above ₹2,000.
• Your bank or payment provider tracks your monthly UPI collections. If they stay above ₹1 lakh for three months in a row, you'll be moved to the regular merchant (P2M) category and the 0.4% fee will apply.
• Your existing QR codes and soundboxes keep working.

Is this a tax?

No. The Finance Ministry says MDR is not a tax and isn't collected by the government or NPCI. It's shared among banks, payment providers and UPI apps to fund the system. 5% of all MDR collected goes into a fund to help small merchants adopt UPI.

How many payments are affected?

The government estimates about 4% of merchant payments will carry the fee; the other 96% stay free because they're ₹2,000 or under or go to small merchants.