The central government has announced that a 0.4 percent MDR will be charged on commercial transactions above Rs. 2,000 made across the country through UPI or debit cards.
As usual, this fee applies only to the amounts paid and received by ordinary people, in a way that does not affect the rich and the wealthy.
It is said that complete details about this have not yet reached merchants.
Why should merchants pay a fee to receive money through UPI?
According to the explanation given by the Central Government, UPI was introduced across the country in 2016. It has now grown rapidly into the world’s largest real-time digital payment platform.
In August 2026, 2,450 crore transactions were carried out through UPI. To maintain this system as self-sustaining, secure, and innovative, a small fee will be levied on high-value commercial payments. It says this will help fund better infrastructure, cybersecurity, and support measures for small businesses.
Who will this amount go to?
This amount will not be collected by the Central Government or the National Payments Corporation of India (NPCI). The Ministry of Finance clarifies that it will be distributed only among all participants, including banks and payment app providers.
Why is there no charge?
There is no charge for payments made by one individual to another through UPI.
There is no charge when purchasing goods or services worth less than Rs. 2000 from any merchant.
Who does not have to pay a charge?
This charge will not be collected from customers who make payments using UPI methods such as GPay, PhonePe, and Paytm. Only merchants will pay this charge.
How much is the charge?
When transactions above Rs. 2000 are made, a charge of 0.4 percent must be paid. For example, if someone receives goods or services worth Rs. 3000 and that amount is paid through UPI, the merchant will have to pay an additional Rs. 12 as a charge. If goods worth Rs. 50,000 are purchased, the merchant will pay Rs. 200 as a charge. But if the amount keeps rising into lakhs and lakhs, will the charge also increase? No.
What is the maximum fee?
For commercial transactions above Rs. 75,000, no matter how many lakhs the amount is, the maximum fee that can be charged is only Rs. 300. No higher amount can be collected. In other words, Rs. 300 has been fixed as the upper limit.
Is there a fixed fee?
In the case of essential services such as railways, telecommunications, and fuel stations, a fixed fee of Rs. 5 will be charged for transactions above Rs. 2,000. No matter how much is paid through UPI, the maximum fee charged will be only Rs. 5. There will be no situation where more than that has to be paid.
There is also an exception!
Small businesses earning up to Rs. 1 lakh per month through UPI QR codes have been exempted from charges.
Who will pay?
No such charges should be collected from the public; only the business establishments should pay.
As usual?
Yes, as usual, this fee applies only to the amount paid by poor and ordinary people. It will not affect the rich or the billionaires. This 0.4 percent fee applies only up to Rs. 75,000. Beyond that, the rich would be affected, so Rs. 300 has been fixed as the upper limit. You can pay any amount, no matter how many crores. The fee is only Rs. 300.
Even though people may not pay this directly, it is certain to fall on people indirectly. In that case, people are asking whose mindset this decision comes from: a fee for a small amount, and an upper limit for a large amount.
When will it come into effect?
This fee collection plan, which has already been announced, has also been stated to come into effect from October 15.
What happens next?
Only after the UPI fee is implemented will it be possible to know what kind of impact it will have on merchants and the public. Will merchants bear this burden? Will they indirectly pass it on to customers? That is the first question.
Or will payment receipts above Rs. 2,000 be split into two bills? Will customers be forced to pay up to Rs. 2,000 through UPI and any amount above that in cash? Will restrictions be imposed on UPI payments, pushing people back to paying in cash? That is the next question.
No, no—will traders and the public, who have already borne so many burdens imposed by the Central and State governments, simply put up with this too in public life, as if it were nothing, like a Goundamani dialogue? We will have to wait and see.