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1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minuteNo, under the Government of India’s published UPI framework, consumers will not be charged for making UPI payments. Person-to-person (P2P) transfers remain free regardless of amount. A merchant discount rate (MDR) may apply to certain merchant-side transactions from 15 October 2026, but the government says that cost is not to be passed on to customers.
What the UPI announcement means for consumers
The Ministry of Finance says consumers will not face UPI transaction charges. Its September clarification also says UPI app providers cannot add platform fees or hidden charges under the described framework, and that banks have been advised to prevent merchants from passing MDR on to customers. These are government policy assurances; they are not a guarantee that every merchant or provider will always behave accordingly.
The Ministry’s earlier statement on 8 August 2026 also said consumers would not face transaction charges, but described possible merchant MDR conditionally. The more specific framework was clarified on 15 September 2026.
Which transactions can have merchant MDR?
MDR is a merchant-side fee in the published framework, not a fee charged to a UPI customer at checkout. The Ministry of Finance says MDR is “neither a tax nor a charge collected by the Government or NPCI”; it is distributed among ecosystem participants, including banks and payment application providers. The Department of Financial Services FAQ sets out these rates for covered transactions:
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| Transaction type | Published MDR treatment |
|---|---|
| P2P transfer, any amount | No MDR; P2P transfers remain free regardless of amount. (Ministry of Finance, 15 September 2026) |
| Merchant payment of ₹2,000 or less | No MDR. (Department of Financial Services FAQ, 15 September 2026) |
| General covered merchant payment above ₹2,000 | 0.4%, capped at ₹300 for transactions of ₹75,000 and above. (Department of Financial Services FAQ, 15 September 2026) |
| Specified essential or thin-margin sectors, above ₹2,000 | Flat ₹5 MDR. (Department of Financial Services FAQ, 15 September 2026) |
| Capital-market transactions | 0.02%, capped at ₹300. (Department of Financial Services FAQ, 15 September 2026) |
| Eligible small merchants in the P2PM category | Zero MDR on all transactions if they receive up to ₹1 lakh per month through UPI QR codes. (Ministry of Finance, 15 September 2026) |
The ₹2,000 threshold is not the only factor: a merchant’s category and eligibility for the small-merchant protection also matter. The listed rates describe merchant-side MDR and should not be read as consumer checkout fees.
When does the framework take effect?
The Department of Financial Services FAQ, issued on 15 September 2026, states that the finalized framework takes effect on 15 October 2026. The August statement preceded the final details; for the effective date and specific MDR rules, the September clarification and FAQ are the controlling published account.
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How many payments remain unaffected?
The Ministry of Finance says approximately 96% of person-to-merchant (P2M) transactions will remain unaffected by MDR under the framework. Separately, the Department of Financial Services FAQ says payments of ₹2,000 or less account for more than 95% of P2M transaction volume. Those figures describe different things: the first is the share of P2M transactions unaffected overall, including small-merchant protections; the second is the share of P2M volume at or below the threshold.
The Ministry also says P2P transactions account for 70% of total UPI transaction value and remain outside the MDR framework. That is a share of transaction value, not a share of transaction count.
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What should you do if a merchant adds a fee?
If a merchant asks for an extra amount specifically because you are paying by UPI, distinguish that request from the MDR framework: the government says MDR is merchant-side and customers should not be charged it. Check the amount requested and the merchant’s receipt, and raise the issue with the merchant or relevant payment provider if the added fee is described as a UPI charge. For policy updates, the official material directs users to Ministry of Finance, RBI and NPCI information, and advises against forwarding unverified messages.
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