UPI Charges From 15 October 2026: What Shop Owners Will Actually Pay
Published: 10/8/2026
Category: Payments
NPCI's new 0.4% MDR on some UPI merchant payments starts on 15 October 2026. Here is who pays, who stays at zero, and how to check your own exposure from last month's sales.
From 15 October 2026, NPCI allows a merchant discount rate (MDR) of 0.4% on eligible UPI payments to merchants above ₹2,000, capped at ₹300 for payments of ₹75,000 or more. Customers pay nothing extra. Most kirana-sized shops will see little or no charge, because payments of ₹2,000 or less stay free and small merchants receiving up to ₹1 lakh a month through a UPI QR are exempt.
That is the short version. The rest of this guide helps you work out what it means for your counter, using numbers you already have.
What exactly changes on 15 October
According to NPCI's FAQs published on 15 September 2026, the new MDR applies only to some person-to-merchant (P2M) UPI payments. The main points:
| Payment type | Charge to the merchant |
|---|
| Person-to-person UPI (friends, family) | Nil |
| Merchant payment of ₹2,000 or less | Nil |
| Small merchant (P2PM) receiving up to ₹1 lakh a month via UPI QR | Nil, on all those payments |
| Eligible merchant payment above ₹2,000 | 0.4% of the payment |
| Eligible merchant payment of ₹75,000 or more | 0.4%, capped at ₹300 |
The charge is collected from the merchant through the bank or payment provider that gives you your QR or soundbox. The customer scanning your QR does not pay a fee.
A worked example
Say a hardware shop receives these UPI payments in a day:
- 40 payments under ₹2,000: no charge
- 6 payments of ₹5,000: 0.4% × ₹30,000 = ₹120
- 1 contractor payment of ₹1,20,000: 0.4% would be ₹480, but the cap applies, so ₹300
Total MDR for the day: ₹420, on about ₹1.9 lakh of UPI collections. The daily total matters less than the pattern: a few large payments drive almost all of the cost.
How to check your own exposure in 15 minutes
- Download last month's UPI settlement report from your bank or QR provider (or export payments from your billing software).
- Filter payments above ₹2,000. Count them and add them up.
- Multiply that total by 0.004. For any single payment of ₹75,000 or more, use ₹300 instead.
- Check your total UPI receipts for the month. If you are a small merchant under the P2PM category receiving up to ₹1 lakh a month via QR, ask your provider to confirm the exemption applies to your account.
If the number is small, nothing needs to change. If it is significant, read on.
Should you change how you take payments?
Do not rush to push customers back to cash. UPI gives you instant settlement, a clear record for GST and fewer counting errors. Instead:
- Price large orders knowing the cost. For contractor or wholesale orders above ₹2,000, 0.4% is usually less than a card MDR and far less than the cost of a cheque that bounces.
- Separate business and personal QRs. Personal QRs used for business can break bank terms and make reconciliation harder.
- Expect GST on the fee. Business Standard reports the MDR may attract 18% GST, which GST-registered merchants can claim as input tax credit. Ask your provider for the fee and GST in writing, and when they are debited (per payment or in the settlement).
- Reconcile weekly. Compare settlement amounts with invoices so a deduction you did not expect is caught in days, not at year end.
What to tell customers
You do not need to say anything to walk-in customers, because they pay nothing extra. Adding a surcharge on top of UPI payments can confuse people and may conflict with your provider's terms, so check those before you consider one.
Where BizFlow fits
BizFlow's billing apps record the payment mode against every invoice, so you can filter UPI payments above ₹2,000 in seconds and match them against bank settlements. See BillFlow for retail billing or plans and pricing.
Frequently asked questions
Q: Do customers pay anything extra when they scan my UPI QR?
A: No. The MDR is charged to the merchant, not the customer.
Q: Are payments of exactly ₹2,000 charged?
A: No. NPCI's FAQs exempt payments of ₹2,000 or less. The charge applies only above ₹2,000.
Q: My shop gets about ₹80,000 a month on UPI. Will I pay MDR?
A: If your account is classed as a small merchant (P2PM) receiving up to ₹1 lakh a month via UPI QR, NPCI says those payments carry no MDR. Confirm your category with your bank or QR provider.
Sources
Reviewed by BizFlow Editorial Team on 2026-10-08. Rules and rates change; confirm tax and compliance details with your CA or the official portal before acting.
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