India to impose 0.4% fee on large UPI merchant payments starting Oct. 15

India’s government will begin charging a 0.4% merchant discount rate on Unified Payments Interface transactions above 2,000 rupees from Oct. 15, while keeping person-to-person and small‑merchant payments free. The government estimates about 96% of person‑to‑merchant transactions will remain unaffected, according to a Sept. 15 press release.

The MDR will be distributed among banks, payment service providers and UPI app providers to support the system’s operation and expansion. Person‑to‑person payments, merchant‑to‑merchant transfers of 2,000 rupees or less, and payments received by qualifying small merchants will remain free. In the United States, the FedNow service charges 4.5 cents per originated credit transfer and 1 cent per request, while the RTP network charges the same rates for sending inter‑participant transfers and requests, with no volume discounts or monthly fees.

The change follows years in which India used zero-MDR rules and government incentives to help build UPI into a payment system with scale. It will be distributed among banks, payment service providers and UPI app providers to support the system’s operation and expansion.

What we know

Beginning Oct. 15, a 0.4% merchant discount rate (MDR) will apply to specified UPI merchant payments above 2,000 rupees (about $20).
India’s government estimates that about 96% of person-to-merchant transactions will remain unaffected.
Official statistics from the National Payments Corporation of India (NPCI) put the totals at 24 billion transactions for September.
The Fed’s official 2026 fee schedule sets the price of an originated customer credit transfer at 4.5 cents and a request for payment at 1 cent.
The Clearing House charges participating institutions 4.5 cents to send an inter-participant credit transfer and 1 cent to send a request for payment or remittance advice on the RTP network.