UPI merchant fee (MDR) after Diwali 2026: who pays, what's free

If you have seen messages saying "UPI will be charged after Diwali", here is the short version. NPCI plans a merchant discount rate (MDR) on some person-to-merchant (P2M) UPI payments above ₹2,000. It was meant to start on 15 October 2026. On 13 October, NPCI's steering committee put it off to "immediately post Diwali at a date to be notified separately". As of 3 November 2026, no new date has been announced.

MDR is a fee the merchant's side pays, not the person paying. Sending money to friends and family (P2P) stays free. Small merchants are exempt. Below are the details we could confirm, and the claims we could not.

What NPCI has said

NPCI's statement is titled "UPI MDR on Select Merchant Transactions Shall be Implemented Post Diwali". Its key line: "MDR on select Person-to-Merchant (P2M) UPI transactions shall be implemented immediately post Diwali at a date to be notified separately." We read this text via search results; NPCI's site blocked a direct download when we checked.

Who pays, and what is exempt

• Payers: nothing. MDR is levied on merchants. NPCI's statements describe no charge on the customer making the payment.
• P2P transfers: free. Sending money to a person, not a business, is not covered.
• P2M payments of ₹2,000 or less: not covered. Only P2M payments above ₹2,000 are in scope.
• Small merchants: merchants receiving up to ₹1 lakh a month through UPI QR keep zero MDR, per News On AIR and NPCI's FAQ.
• Scale: about 96% of P2M transactions are unaffected, as reported by News On AIR.

The rate, with a caveat

NPCI's FAQ on the MDR, as seen in search results, gives a rate of 0.4% on P2M payments above ₹2,000, capped at ₹300 per transaction for payments of ₹75,000 and above. We could not read that FAQ verbatim, and it was published with the old 15 October date, which no longer applies. Outlook Money also reports 0.4% for eligible merchant payments above ₹2,000, while the Free Press Journal notes that NPCI's latest communication does not specify rates. Treat the rate as reported, not final, until NPCI notifies a date.

Worked examples, if the reported rate applies

These use the reported 0.4% rate and ₹300 cap, and assume the merchant is not in the small-merchant exemption. They are illustrations, not NPCI figures.

• You pay a shop ₹1,500 by UPI: not covered (₹2,000 or less). Merchant fee ₹0; you pay ₹1,500.
• You pay a shop ₹5,000 by UPI: covered. Merchant fee 0.4% = ₹20, paid by the merchant's side; you pay ₹5,000.
• You pay a jeweller ₹1,00,000 by UPI: covered, but capped. 0.4% would be ₹400; the reported cap limits it to ₹300.
• A kirana store receiving ₹80,000 a month through its UPI QR: within the ₹1 lakh monthly limit, so zero MDR.
• You send ₹10,000 to your brother: P2P, free.

Myths vs facts

• Myth: "UPI will cost me money from 9 November." Fact: no date has been notified. Outlook Money wrote that the charges are expected in the second week of November; that is an expectation, not an NPCI date. And the fee is on merchants, not payers.
• Myth: "It has been pushed to 1 January 2027." Fact: earlier reports of a 1 January 2027 deferral were speculation. NPCI's latest word is "post Diwali at a date to be notified separately".
• Myth: "All UPI payments will be charged." Fact: only P2M above ₹2,000 at merchants outside the small-merchant exemption. P2P is free.
• Myth: "The rate is final." Fact: the 0.4% and ₹300 cap come from an NPCI FAQ we could not read verbatim, published before the deferment. NPCI's latest statement does not restate rates.
• Myth: "This also changes RuPay credit card payments on UPI." Fact: the sources we checked do not address RuPay credit cards on UPI, so we make no claim either way.

What to do at the counter

• Keep paying by UPI as you do now. Nothing changes for payers on the dates announced so far.
• If a shop asks you to pay an extra "UPI charge", ask what it is for and ask for a bill that shows it. NPCI's statements describe MDR as a merchant-side fee.
• If you run a small business, check your monthly UPI QR receipts against the ₹1 lakh line, and watch NPCI and your payment provider for the notified start date.
• Ignore forwards that give a firm date until NPCI publishes one. We will update this post when it does.

Spendzie reads your bank and card SMS to track spends, EMIs and card fees, including UPI debits. If a merchant ever adds a surcharge to a UPI payment, it will show up in the amount debited, and you can spot it against the bill. Spendzie does not give loans, does not give investment advice and is not a bank.

Publish notes and sources

• NPCI statement title; MDR on select P2M UPI transactions "shall be implemented immediately post Diwali at a date to be notified separately"; no later circular or notified date found in searches on 3 Nov 2026 evening (text via search; direct fetch returned 403) — NPCI, 13 Oct 2026 — https://www.npci.org.in/uploads/UPI_MDR_on_Select_Merchant_Transactions_Shall_be_Implemented_Post_Diwali_4c9cdd77d5.pdf
• Steering committee deferred from 15 Oct 2026 on 13 Oct; only P2M above ₹2,000; P2P free; merchants up to ₹1 lakh/month via UPI QR keep zero MDR; about 96% of P2M unaffected (media report) — News On AIR, 15 Oct 2026 — https://newsonair.gov.in/npci-postpones-implementation-of-mdr-on-select-person-to-merchant-upi-transactions/
• Payers pay ₹0 MDR (cover stat): MDR is a merchant-side fee on select P2M transactions; P2P free regardless of amount — News On AIR, 15 Oct 2026 (re-read 3 Nov 2026) — https://newsonair.gov.in/npci-postpones-implementation-of-mdr-on-select-person-to-merchant-upi-transactions/
• 0.4% MDR on P2M above ₹2,000, capped at ₹300 per transaction at ₹75,000 and above; original 15 Oct date (via search, not verbatim-verified) — NPCI FAQ on MDR — https://www.npci.org.in/uploads/FA_Qs_Merchant_Discount_Rate_MDR_on_Select_UPI_P2_M_Transactions_58dba1d39e.pdf
• NPCI's latest communication does not specify MDR rates; date to be notified separately (media report) — Free Press Journal — https://www.freepressjournal.in/business/npci-defers-upi-mdr-charges-until-after-diwali-new-implementation-date-to-be-announced
• New date yet to be announced; charges 'expected to take effect in the second week of November'; 0.4% MDR on eligible merchant transactions above ₹2,000 (media report) — Outlook Money — https://www.outlookmoney.com/banking/upi-mdr-charges-delayed-until-after-diwali-new-date-yet-to-be-announced
• Earlier reports of deferral to 1 Jan 2027 (speculation; media report) — Deccan Chronicle — https://www.deccanchronicle.com/amp/nation/merchant-fee-on-upi-payments-may-be-deferred-till-january-1-1994195
• Diwali (Lakshmi Puja) on Sunday 8 Nov 2026 — Spendzie editorial calendar for this batch
• Worked examples (₹0 on ₹1,500; ₹20 on ₹5,000; ₹400 capped to ₹300 on ₹1,00,000; ₹80,000 monthly QR receipts exempt; P2P ₹10,000 free) — Spendzie calculation using the reported, unconfirmed rate
• Researched and verified by the Spendzie editorial desk on 3 November 2026. Figures may change; we will update this post if they do.

Disclaimer

This article is general information only and is not financial, investment, tax or legal advice. Spendzie is not a bank, lender, SEBI-registered investment adviser or research analyst. Brand, product and card names are used for identification only and do not imply endorsement or partnership. Fees, rules and data change; always verify with the official source (RBI, NPCI or your card issuer) and your own card's terms before making a decision.