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Customers hearing that UPI MDR returns on 15 October 2026 assume they will be charged. Under the notified framework they are not; the charge falls only on merchants.
Map each UPI flow to who pays: P2P free (Q16, Q20); consumer scanning free (Q19); no app platform fee (Q17); merchant pays MDR above ₹2,000 and cannot surcharge (Q34); AutoPay exempt (Q22).
Customer-side charge: zero on all flows. Merchant-side: 0% at or below ₹2,000; 0.4% above ₹2,000; ₹300 cap at or above ₹75,000; P2PM exemption at or below ₹1 lakh/month; PIL pending.
A plain who-pays table for consumers and a checkout rule for merchants: no UPI surcharge line may appear on a customer bill.
Last verified 17 September 2026. The notified framework, effective 15 October 2026, is currently subject to a pending Supreme Court challenge (PIL filed 16 September 2026). This page describes the notified position as of that date.
No. Under the framework notified for 15 October 2026, customers are not charged for UPI payments — not for sending money to people, not for paying shops, and not by their UPI app. The new charge, called the merchant discount rate (MDR), is paid by merchants on larger payments, and merchants are not allowed to pass it on to you.
Who pays what on UPI from 15 October 2026?
| UPI payment type | Does the customer pay? | Does the merchant pay? | Source |
|---|---|---|---|
| Sending money to a person (P2P) | No, any amount | Not applicable | FAQ Q16, Q20 |
| Scanning a shop’s QR, at or below ₹2,000 | No | No (0%) | FAQ Q19 |
| Scanning a shop’s QR, above ₹2,000 | No | Yes — 0.4% | FAQ Q19 |
| Payment of ₹75,000 or more | No | Yes — capped at ₹300 | NPCI FAQ |
| UPI AutoPay / subscriptions | No | No — exempt | FAQ Q22 |
| UPI app “platform fee” | No — barred | Not applicable | FAQ Q17 |
The rules come from the NPCI FAQ dated 15 September 2026, hosted on financialservices.gov.in, which follows the Taxation and Other Laws (Amendment) Act 2026 (assent 17 August 2026) and a Ministry of Finance notification dated 14 September 2026.
Is paying a shop still free for me?
Yes, at any amount. When you scan a QR code, the customer side of the payment is free (Q19). If the payment is above ₹2,000, the merchant pays 0.4% of it — ₹12 on a ₹3,000 bill, for example — plus 18% GST on that fee, as reported by Business Standard on 16 September 2026. That cost comes out of what the merchant receives, not out of your account.
Some sectors pay less. Railways, telecom, insurance, fuel and utility bills carry a flat ₹5 per transaction above ₹2,000 (Q33, Q39–Q41). Education payments get “flat-fee structures or capped processing rates” under Q42. Either way, the customer pays nothing extra. Many small shops pay nothing at all: merchants receiving ₹1 lakh or less a month through UPI QR stay in a zero-MDR small-merchant category (Q23, Q24, Q28).
Can my UPI app start charging me?
No. The FAQ explicitly bars UPI app providers from charging consumers a platform fee on UPI payments (Q17). Transfers to friends and family also stay free with no upper limit (Q16, Q20).
Note one boundary: RuPay credit cards and credit lines used on UPI are outside this framework (Q36), so their terms are set separately.
What if a merchant adds a UPI surcharge?
Merchants cannot surcharge the MDR to customers (Q34). A bill that adds a line such as “UPI charges” conflicts with that rule. You can point this out to the merchant, or raise it with your bank. For merchants, the practical consequence is that the MDR becomes a cost to absorb and to verify each settlement cycle — the work that payment gateway reconciliation covers.
Subscriptions paid through UPI AutoPay are exempt from the MDR altogether (Q22), so there is no fee for anyone to pass on.
Why did people expect customers to pay?
The confusion is understandable. For several years bank-account UPI and RuPay debit carried zero MDR by law, and “UPI is free” was often read as “UPI is free for everyone.” The 2026 amendment narrows the statutory zero on UPI to merchant payments at or below ₹2,000, and allows a notified MDR above that line. Headlines about a “0.4% UPI charge” rarely add that the charge sits on the merchant’s side of the transaction.
Two numbers help put it in proportion. First, NPCI’s own figure is that about 95% of merchant UPI payments by count are at or below ₹2,000, and so carry no MDR even for the merchant. Second, the cap means a merchant never pays more than ₹300 in MDR on a single payment, however large. Neither number changes what the customer pays, which remains nothing.
What customers should check is simpler: that the amount debited from their account matches the bill. If the bill shows the agreed price and your bank debit matches it, no UPI fee has been passed to you.
Could any of this change?
The notified framework, effective 15 October 2026, is currently subject to a pending Supreme Court challenge (PIL filed 16 September 2026). If the Court stays or strikes it down, the earlier zero-MDR position continues — which is also free for customers. In every outcome currently on the table, the customer does not pay. For the legal background, see the UPI zero-MDR regime under Section 269SU and the PSS Act.
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- ▸ NPCI FAQ dated 15 September 2026 — Merchant Discount Rate (MDR) on Select UPI (P2M) Transactions — Primary operative source hosted on the Department of Financial Services site. P2P free with no cap (Q16, Q20); consumer scanning free (Q19); UPI apps barred from consumer platform fees (Q17); AutoPay exempt (Q22); no merchant surcharge (Q34); P2PM exemption (Q23, Q24, Q28).
- ▸ Section 10A, Payment and Settlement Systems Act 2007 (as amended by the Taxation and Other Laws (Amendment) Act 2026) — Presidential assent 17 August 2026; Ministry of Finance notification 14 September 2026; effective 15 October 2026.