India's Unified Payments Interface (UPI) will begin charging a 0.4% merchant fee on certain transactions exceeding ₹2,000 (about $21) from October 15, 2026. This move by the National Payments Corporation of India (NPCI), which operates the network, aims to make the widely used digital payments system financially self-sustaining after years of free processing for merchants.
The new fee is capped at ₹300 (about $3) for transactions of ₹75,000 (around $783) or more. Payments of ₹2,000 or less will remain free for merchants, as will transactions for small merchants receiving up to ₹100,000 (about $1,041) a month through UPI. Consumers will continue to use UPI without direct charges.
The NPCI stated that the new merchant fees will be distributed among participants in the UPI ecosystem and used to fund investments in infrastructure, cybersecurity, fraud prevention, and customer service. The annual cost of running the network, including server capacity, fraud prevention, and technical support, is estimated by industry figures, per NPCI, to be about ₹200 billion ($2.1 billion).
This shift follows an amendment to India’s payments law in August 2026, which allowed for merchant fees on some UPI transactions. A notification on Monday specified that banks cannot levy charges on UPI payments up to ₹2,000, paving the way for fees on larger transactions.