Merchants to Bear 0.4% Fee on High‑Value UPI Payments from Oct 15, RBI Says Impact Small

From October 15, merchants will pay a 0.4% fee on high‑value UPI person‑to‑merchant transactions that exceed Rs 2,000, with the charge capped at Rs 300 for payments of Rs 75,000 or more. The fee, called a merchant discount rate, is being introduced by the National Payments Corporation of India and will be borne only by merchants, not by consumers. RBI Governor Sanjay Malhotra said the decision has already been taken and he does not expect a drop in UPI volumes, calling the charge small. He added that, as of now, there is no sign of volume decline and a modest fee should not have a major impact. In the second quarter of the 2026‑27 financial year, UPI transaction volumes grew 22.2%, a slowdown from the 24.2% rise recorded in the first quarter. While the RBI regulates the payment system, the legal framework is set by the government and the MDR structure was rolled out by NPCI under that framework. Bankers noted that the absence of a direct charge to consumers could limit any immediate impact, but the true effect will depend on how merchants respond to the added processing cost. The coming months will test whether the RBI’s confidence in UPI’s scale holds true.

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