Important news has come out for the millions of people who use digital payments. Discussions have started on new charges for UPI transactions, which were almost free till now. Especially for services like petrol, electricity, water, piped gas, telecom, insurance and railways, UPI payments of more than ₹2000 may incur a charge of up to ₹5 per transaction. Meanwhile, a rule has been issued for merchants to charge for transactions above ₹2000. This rule will come into effect from October 15.

Which services may be charged?

For select services, a fixed charge based on the transaction has been introduced, replacing the usual 0.4 percent merchant discount rate (MDR). This includes categories like petrol pumps, telecom, insurance, and railways. Furthermore, a provision of up to ₹5 will also apply to electricity, water, and piped gas bills. This means that if a bill exceeds ₹2,000 and the transaction related to it falls within this charge, an additional amount may be charged on that transaction. Meanwhile, a rate of 0.02 percent has been announced for some UPI payments related to mutual funds and the stock market, with a maximum fee of ₹300. However, MDR will not apply to some auto-debit transactions.

What's the reason behind UPI fees?
Operating the UPI network, maintaining servers, and preventing fraudulent transactions incur significant costs. According to available information, a significant amount of money is spent annually on UPI infrastructure. In August 2026, approximately 2,451 crore transactions were processed using UPI, with a total value of approximately ₹29.9 lakh crore.

Will GST be levied on this fee?
What share of the proceeds will the bank, UPI app, and NPCI share? Furthermore, what action will be taken against merchants if they charge this fee directly from customers? Official clarification is awaited on this matter. Therefore, instead of panicking now, it's important for UPI customers to understand the official rules that apply to their payment type.

PC: CNBC TV18