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UPI transaction charges for small businesses UPI has become a common way for small businesses to receive payments. So, any change in UPI charges can affect their payment costs.
From October 15, 2026, some merchant UPI payments above ₹2,000 will have a 0.4% MDR. However, this charge will not apply to every UPI payment.
1. Most Small UPI Payments Stay the Same
A charge will not be added to every UPI payment. Merchant payments of up to ₹2,000 will continue without MDR, and payments between individuals will also remain free.
So, if a small shop usually receives smaller UPI payments from customers, there may be little change in its regular transactions. UPI transaction charges for small businesses
2. Higher-Value Payments May Cost More
Not all UPI payments and transactions will be treated the same way. From October 15, a 0.4% MDR will apply to some eligible merchant payments above ₹2,000.
For a ₹10,000 payment, for example, the merchant would pay ₹40 as MDR. The customer does not have to pay this amount separately. UPI transaction charges for small businesses
3. Small Businesses Can Still Use UPI Without MDR
Small merchants receiving up to ₹1 lakh a month through UPI QR will continue to get zero MDR under the small-merchant framework.
This means many local shops and small vendors will still be able to accept their usual UPI payments without this additional cost.UPI transaction charges for small businesses
4. Businesses Need to Keep Track of Their UPI Collections
Businesses that receive a large number of UPI payments may need to keep a closer eye on their monthly collections. Knowing how much money is coming through UPI can help them understand whether the new MDR rules apply to their transactions.
Keeping payment records properly can also make it easier to check the charges shown by the bank or payment provider. UPI transaction charges for small businesses
5. MDR Should Not Be Added to the Customer’s Bill
The new MDR is a merchant-side charge. Customers are not supposed to pay it separately when they make a UPI payment.
The government has also advised banks to ensure that merchants do not pass the MDR on to customers, while UPI app providers have been prohibited from adding platform or hidden charges. UPI transaction charges for small businesses
6. Businesses Should Keep the Charge in Mind
For businesses that receive a lot of larger UPI payments, the small MDR charge can add up over time. So, it is worth keeping an eye on the payment statements and knowing how much is being charged.
The government expects around 96% of P2M UPI transactions to continue without MDR, so the change will not affect most regular UPI payments. UPI transaction charges for small businesses
7. Check Your Payment Statements
It is a good idea for businesses to check their UPI payment statements regularly. This can help them see whether any MDR has been charged and whether the amount matches the applicable rate. It can also help them spot any issue early instead of finding it later.
The new UPI charge structure mainly affects selected higher-value merchant payments. Small businesses should understand where the MDR applies, keep their payment records clear, and plan their expenses accordingly. For most everyday UPI payments, the existing convenience of UPI will remain unchanged.
References:
1] Merchants to be charged 0.4% for UPI transactions over ₹2,000; small vendors exempt, The Hindu Article, 18 September 2026 [ Online ] : https://www.thehindu.com/business/npci-introduces-04-percent-mdr-charge-on-upi-payments-above-rs-2000-exempts-small-merchants-person-to-person-transfers/article71468913.ece/amp
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2] Nikita Yadav, The small fee raising big questions for India’s payments revolution, BBC News , 16 September 2026 [ Online ]Â : https://www.bbc.com/news/articles/ckpd0y9gdp5lo
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