UPI fee set to raise costs for some merchants as industry awaits rollout
A merchant survey included in How Urban India Pays 2026, a report by Pahlé India Foundation in partnership with Amazon Pay, found that 25% of respondents expect to pay more than ₹5,000 a month. Another 58% of the merchants expect to pay ₹1,000 or less, including 13% who expect no charge.
India's plan to impose merchant discount rates (MDR) on certain UPI transactions will bring additional expenses for some businesses, despite most merchant payments remaining free. A survey conducted by the Pahlé India Foundation in collaboration with Amazon Pay reveals a wide range of expectations regarding the impact of this new fee structure.
According to the findings, 25% of merchants surveyed anticipate paying more than ₹5,000 per month, while 58% expect their charges to be ₹1,000 or less, including 13% who anticipate no charge at all. The majority of UPI payments to merchants will remain free under the proposed MDR. The National Payments Corporation of India (NPCI), which manages the UPI, announced the implementation of MDR for select person-to-merchant UPI transactions starting 15 October, while person-to-person transactions will continue to be free.
The standard rate for MDR is set at 0.4% on transactions exceeding ₹2,000 per transaction, capped at ₹300. However, pending the rollout, the implementation date has been postponed until after Diwali, which falls on 8 November. Small merchants using the specified UPI QR arrangement remain exempt from MDR, provided they have not exceeded the monthly UPI-receipts threshold for three consecutive months.
Written by urgent.news from Live Mint's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
