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UPI, credit cards and net banking can have different costs for the merchant and the customer. Under NPCI’s framework effective October 15, 2026, eligible UPI person-to-merchant payments above ₹2,000 carry 0.4% MDR, capped at ₹300 for transactions of ₹75,000 or more; payments up to ₹2,000 are unaffected. NPCI lists typical standard credit-card MDR at 1.5%–2.5%, while online NEFT from a savings account is free to the customer under RBI directions. But a merchant’s actual card or net-banking acceptance fee depends on its provider contract, and a platform may separately disclose a checkout fee.
At a glance
| Payment method | Merchant cost | Customer cost | Checked |
|---|---|---|---|
| UPI bank-account payment | Eligible P2M payments above ₹2,000: 0.4% MDR; capped at ₹300 for payments of ₹75,000 or more. Up to ₹2,000 is unaffected. | No UPI MDR charged to the customer; a platform may separately disclose a fee. | November 2026 |
| Credit card | Typical standard MDR: 1.5%–2.5%; actual merchant terms and categories vary. | Potential interest or late fees if the cardholder carries a balance or pays late; a disclosed checkout fee may also apply. | November 2026 |
| Debit card | NPCI states debit-card MDR is capped up to 0.90%; applicable caps depend on merchant category and acceptance conditions. | RBI directs banks to ensure merchants do not pass debit-card MDR on to customers; other disclosed checkout fees may be separate. | November 2026 |
| Net banking / online NEFT | No single standard merchant checkout rate is established by the public sources; check the merchant’s acquirer or payment-aggregator contract. | Online NEFT from a savings account is free to the account holder under RBI directions. A platform fee is separate. | November 2026 |
Prices checked November 2026.
UPI rates are for the select person-to-merchant transactions covered by NPCI’s September 2026 MDR FAQ. MDR is a merchant acceptance charge, not a customer’s bank-transfer fee.
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There is no single winner for both sides. For eligible UPI payments above ₹2,000, NPCI’s stated 0.4% rate is below its typical standard credit-card MDR range of 1.5%–2.5%. For a customer paying from a savings account, ordinary UPI generally avoids the merchant’s MDR, and an online NEFT transfer is free under RBI directions. But “net banking” at a merchant checkout is not automatically the same as a free NEFT transfer, and a card can cost its user interest or late fees if not repaid as required.
The useful comparison separates four things:
- Merchant MDR: the acceptance charge generally recovered from the merchant at settlement.
- Customer bank-transfer charge: for example, RBI says banks must not charge savings-account holders for online NEFT initiated through internet banking or mobile apps.
- Checkout or convenience fee: a separate fee a platform or service provider may disclose to the customer.
- Card borrowing costs: interest or late-payment charges that depend on the cardholder’s account and payment behavior, not the merchant’s MDR.
So, if the question is “Is UPI cheaper than a credit card?” for a merchant, the current published figures point to lower UPI acceptance cost for covered payments, especially above the threshold. If the question is what the customer pays, compare any fee shown at checkout and, for credit cards, whether the balance will be paid in full on time. The headline MDR alone cannot answer the customer’s total-cost question.
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How much does UPI cost a merchant now?
NPCI’s September 15, 2026 FAQ says a 0.4% MDR applies to select UPI person-to-merchant transactions above ₹2,000, effective October 15, 2026. Transactions up to ₹2,000 are unaffected. For transactions of ₹75,000 and above, the MDR is capped at ₹300 per transaction.
That means the amount and transaction type matter. At exactly ₹2,000, the FAQ’s unaffected threshold applies; a covered transaction above ₹2,000 falls into the 0.4% framework. At ₹75,000 or more, the cap prevents the charge from exceeding ₹300. The cap is relevant because 0.4% of ₹75,000 is ₹300; above that amount, applying the percentage without the cap would exceed the stated maximum.
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NPCI also says more than 95% of UPI P2M transaction volume is at or below ₹2,000. Treat that as NPCI’s September 2026 snapshot, not a permanent distribution or a guarantee that a particular merchant’s sales are mostly exempt. The rule is scoped to select P2M transactions; it should not be stretched to person-to-person transfers or every payment described casually as “UPI.”
For the customer, MDR is not the same as a UPI transfer fee. The cited framework sets a merchant-side acceptance charge; it does not say the merchant MDR is charged to the customer. A payment app, marketplace, biller or other provider may still display a separate convenience, handling or facilitation fee. Check the final amount before authorizing payment.
Are credit cards more expensive than UPI?
They are typically more expensive for merchant acceptance according to NPCI’s published ranges, but not every merchant pays the same rate. NPCI gives standard credit-card MDR as typically 1.5%–2.5% per transaction, compared with 0.4% for eligible UPI payments above ₹2,000 and the stated UPI cap at higher values.
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For scale, applying the published percentages to a hypothetical ₹10,000 sale gives ₹40 at 0.4% UPI MDR and ₹150–₹250 at 1.5%–2.5% credit-card MDR. These are arithmetic illustrations, not quotes or predictions of a particular merchant’s settlement: actual terms depend on the merchant’s acquirer agreement, card and merchant category, and applicable transaction rules.
RBI explains that credit-card MDR includes costs associated with the issuer providing an interest-free credit period and taking on credit risk. This helps explain why credit-card acceptance can cost more than debit-card acceptance, but the merchant’s contract remains the practical source for its actual rate. A published typical rate is a benchmark, not a guaranteed quote.
For the customer, the card’s cost depends on repayment. Paying a card bill in full by its due date can avoid interest on carried balances under the card’s terms; carrying a balance or paying late can add costs. Those costs are separate from MDR, which is generally a merchant expense. Do not assume every checkout surcharge is MDR, and do not infer from this comparison that every credit-card surcharge is permitted: the supplied sources do not establish a blanket rule for all credit-card surcharge situations.
What does debit-card MDR have to do with this comparison?
Debit cards are not the same price category as credit cards. NPCI states that debit-card MDR is capped up to 0.90%, while RBI’s framework varies caps according to merchant size and acceptance infrastructure. The precise cap applicable to a merchant is therefore not established simply by saying “debit card.”
RBI’s debit-card circular directs banks to ensure merchants do not pass debit-card MDR on to customers. This is a useful distinction when a customer sees a card-related amount at checkout: a merchant acceptance charge and a separately disclosed platform or service fee are not automatically the same thing. The applicable fee and rules should be checked in context rather than labeling every added amount “MDR.”
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Does net banking charge a fee?
For a savings-account holder making an online NEFT transfer through internet banking or a mobile app, RBI says the bank must not charge the customer. That answer does not establish that every merchant checkout option labeled “net banking” is free to the merchant or customer.
At checkout, “net banking” can refer to a payment flow provided through a payment aggregator, acquirer or other service provider. The merchant’s contracted acceptance fee is set by that arrangement, and the public sources here do not establish one universal net-banking MDR or merchant rate. A platform may also show its own convenience or handling charge. Check the total presented before confirming, and for a merchant, ask the acquiring provider for its current net-banking rate and settlement terms.
RBI’s NEFT FAQ also describes maximum charges for some other outward NEFT transfers, including branch-initiated cases. Those are distinct from online NEFT from a savings account and from a merchant’s checkout acquiring cost. Do not apply the branch-transfer fee schedule to an online merchant payment without checking the transaction channel and account type.
Who pays UPI MDR or a checkout convenience fee?
UPI MDR, where it applies under the current framework, is a merchant-side acceptance charge. A convenience or handling fee is a different charge that a service provider or platform may impose on a customer and disclose separately.
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Similarly, a merchant should not treat the customer’s bank account fee, the merchant’s acquiring charge and a platform’s disclosed fee as interchangeable. They may be incurred by different parties under different arrangements.
Is a RuPay credit card on UPI the same as ordinary UPI?
No. The funding source matters. A bank-account-funded UPI payment, a RuPay credit card linked to UPI and a person-to-person transfer are different payment categories; the select P2M MDR FAQ should not be used as if every one of them had the same treatment.
A historical example shows why merchants need to read the exact schedule: Indian Bank’s notice for RuPay credit-card transactions through its UPI QR merchants, effective May 20, 2024, listed category-specific MDR of 1% for specified industry-program categories and 2.10% for other categories, exclusive of GST. It exempted qualifying small, offline, static-QR merchants for transactions up to ₹2,000. That was one bank’s dated schedule, not a universal current tariff, and it should not be substituted for a merchant’s current agreement or NPCI’s later select-P2M framework.
For consumers, selecting a credit card linked to UPI may mean the payment is funded as card credit rather than debited from a bank account. Check the payment source shown in the app and the card’s own terms. For merchants, check the applicable acquirer and card-category schedule rather than assuming that a QR payment necessarily has ordinary bank-account UPI pricing.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How should a merchant compare its real payment costs?
A merchant should compare the fee actually charged under its own agreement, not just public headline rates. Before changing checkout defaults or discouraging a payment type, check these items:
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- Identify the payment source. Separate bank-account UPI from RuPay credit-card-on-UPI, credit cards, debit cards and net-banking checkout flows.
- Apply the UPI threshold correctly. Confirm whether each transaction is a covered P2M payment above ₹2,000 and whether the ₹300 cap applies at ₹75,000 or more.
- Get the card schedule by category. Ask the acquirer for the current credit/debit rates for the merchant’s category and transaction channel. NPCI’s typical credit-card range and debit cap are not merchant-specific quotes.
- Request the net-banking price separately. Do not confuse an account holder’s free online NEFT with the merchant’s contracted checkout-acquiring fee.
- Check settlement and other charges. Ask how the provider applies the rate and whether any separate fees affect the settlement amount; do not infer these terms from MDR alone.
- Review what the customer sees. Distinguish merchant acceptance cost from a disclosed convenience, handling or facilitation fee, and examine the exact checkout total.
There is no universal public net-banking price or single negotiated card rate for every merchant. A current written quote from the payment aggregator or acquirer is necessary to determine a specific business’s costs.
Why do older sources say UPI is free?
They describe earlier policy periods. An August 18, 2025 Lok Sabha answer said there was then no proposal to impose UPI transaction charges; RBI’s discussion paper described the zero-charge arrangement effective January 1, 2020; and a government incentive-scheme release described zero UPI MDR during the FY 2024–25 scheme period. Those dated statements do not override NPCI’s later FAQ, which sets the select P2M framework effective October 15, 2026.
For that reason, broad claims such as “all UPI is always free for merchants” are no longer accurate without a date and scope. The current comparison should use the later NPCI FAQ for eligible P2M transactions, while retaining the distinction between merchant MDR, a customer fee and other UPI transaction types.
Sources
- NPCI: Merchant Discount Rate (MDR) on Select UPI (P2M) Transactions
- RBI: Discussion Paper on Charges in Payment Systems
- RBI: Frequently Asked Questions on NEFT
- RBI: Master Direction on Regulation of Payment Aggregator
- RBI: Rationalisation of MDR for Debit Card Transactions
- Lok Sabha answer on UPI transaction charges, August 18, 2025
- PIB: Advancing Cashless India
- Indian Bank: dated RuPay credit-card MDR notice for UPI QR merchants
Frequently Asked Questions
Can a merchant add UPI MDR to my bill?
The NPCI framework describes MDR as a merchant-side acceptance charge, not the customer’s UPI transfer fee. If a checkout adds an amount, check whether it is described as a separate platform or service fee and review the displayed total before paying.
Is online NEFT free for every bank account?
The RBI statement cited here specifically concerns online NEFT initiated by savings-account holders through internet banking or mobile apps. It does not establish that every account type, channel or merchant checkout arrangement has identical charges.
Does the ₹300 UPI cap apply to payments below ₹75,000?
NPCI’s stated cap is for transactions of ₹75,000 and above. The published rate is 0.4% for eligible P2M transactions above ₹2,000; the cap does not make the charge a flat ₹300 for smaller payments.
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The available data does not establish the interest treatment of a particular card or account. Check the card issuer’s current terms and statement; the merchant’s MDR is separate from any balance or late-payment cost you may owe.
