contact.paisamarket@gmail.comUpdated: 29 September 2026 | Supreme Court on 28 September declined interim stay. MDR framework remains scheduled for 15 October 2026. Centre told the Court that ~96% of UPI transactions will stay exempt.
Will I Have to Pay Extra When I Use UPI After 15 October?
No.
As a customer, you will not be charged any extra fee for using UPI.
The new Merchant Discount Rate (MDR) is paid by the merchant, not by you.
Person-to-person transfers and most everyday payments continue to remain completely free.
Bottom line: Your UPI experience stays the same. The cost, wherever applicable, is on the merchant’s side.
What the Supreme Court Decided
On 28 September 2026, a Supreme Court bench headed by Chief Justice of India Surya Kant (along with Justices Joymalya Bagchi and V. Mohana) heard a public interest litigation challenging the new UPI MDR framework and refused to grant an interim stay. It issued notices to the Centre, RBI and NPCI, directing them to file counter-affidavits within four weeks.
The Court refused to grant an interim stay. It issued notices to the Centre, the Reserve Bank of India and the National Payments Corporation of India, directing them to file their counter-affidavits within four weeks.
The Court observed that the issue appeared “less legal and more technical.” Additional Solicitor General N. Venkataraman, appearing for the Centre, informed the bench that around 96 per cent of UPI users/transactions would remain exempt from the charge.
As a result, the 15 October 2026 start date for the new MDR framework remains on track for now. The legal challenge will continue, and the Court can issue further directions after examining the responses.
Exact Rules That Will Apply from 15 October 2026
Here is the clean breakdown of the framework:
| Transaction Type | MDR Applicable | Who Pays? |
|---|---|---|
| Person-to-Person (P2P) any amount | Free | — |
| Payments to merchants up to ₹2,000 | Free | — |
| Standard merchant payments above ₹2,000 | 0.4% (max ₹300) | Merchant |
| Essential sectors (fuel, railways, telecom, insurance, agri inputs) above ₹2,000 | Flat ₹5 | Merchant |
| Small merchants (UPI receipts ≤ ₹1 lakh/month) | Free | — |
For transactions of ₹75,000 and above, the 0.4% MDR is capped at ₹300. Capital-market related transactions have a separate lower rate of 0.02% (also capped at ₹300).
Essential sectors such as fuel attract only a flat ₹5 MDR on transactions above ₹2,000. For the full details on how this works specifically at petrol pumps, see our earlier guide on UPI MDR at petrol pumps from 15 October.
What Remains Completely Free for You
This is the most important part for ordinary users.
- All money transfers to family, friends or any individual (person-to-person) remain free, no matter how large the amount.
- Every merchant payment of ₹2,000 or less continues to be free.
- Payments to small merchants who receive up to ₹1 lakh per month through UPI stay under zero MDR.
- Daily expenses such as groceries, food delivery, local travel, most utility bills and small retail purchases are unaffected in the vast majority of cases.
Person-to-person UPI transfers remain free irrespective of the amount. Merchant payments up to ₹2,000 also continue to be free.
Real-Life Examples – Which Payments Attract MDR?
These remain free for the customer:
- Sending ₹10,000 or even ₹50,000 to your parents
- Paying ₹1,800 for groceries at the local store
- Paying ₹450 for food delivery
- Paying ₹900 for a cab or auto
- Settling a ₹1,500 electricity or mobile bill
These will attract MDR (paid by the merchant, not by you):
- Buying a mobile phone for ₹18,000 via UPI
- Paying ₹25,000 for furniture or electronics
- Settling an ₹8,000 restaurant bill
- Paying ₹3,500 or more for online shopping (if the merchant does not qualify for the small-merchant exemption)
In all the second-category cases, the merchant bears the 0.4% cost (or the flat ₹5 in essential sectors). Your UPI app will still show the same amount you intended to pay.
What Changes for Merchants
High-value or high-volume merchants — especially in electronics, larger retail, apparel, jewellery and similar categories — will start paying 0.4% on eligible transactions above ₹2,000. The maximum they can be charged on any single transaction is ₹300.
Essential and thin-margin sectors (fuel, railways, telecom, insurance and agricultural inputs) pay only a flat ₹5 on transactions above ₹2,000. Very small merchants whose monthly UPI receipts stay within ₹1 lakh continue with zero MDR.
Some merchant groups have already protested the upcoming charges — mobile retailers, for example, planned a symbolic No UPI Day on 2 October. The actual cost impact will begin only from 15 October.
After 15 October, most merchants are expected to absorb the cost. Some may prefer cash or cards for very large-ticket sales. A few may review pricing over time. The government has clearly stated that the MDR should not be passed on to customers as a separate charge.
Will Prices of Goods and Services Increase?
In theory, merchants could try to recover the additional cost. In practice, competition in most retail categories is high, and the government has said the charge should not be loaded onto customers.
For everyday low-value purchases, the impact is expected to be negligible. On high-value items (smartphones, electronics, large furniture, jewellery), sellers may manage costs more carefully. Whether that translates into higher listed prices will depend on individual business decisions and market competition. Customers should simply watch for any attempt to add a separate “UPI charge” on the bill and question it if it appears.
Timeline & What Happens Next
- 15 October 2026: The new MDR framework becomes operational.
- Next four weeks: The Centre, RBI and NPCI will file their detailed replies in the Supreme Court.
- The legal challenge remains alive. The Court can still issue further directions after studying the responses.
- Until any new judicial order comes, the 15 October start date stands.
What You Should Do
For Customers
Continue using UPI exactly as you do today. There is no need to change any daily habit for regular payments. For very large purchases, it is sensible to keep a debit/credit card or cash as a backup in case a particular merchant prefers an alternative mode. If any merchant tries to add an extra “UPI charge” on your bill, you can politely point out that the MDR is meant to be borne by the merchant.
For Merchants / Shop Owners
Check whether you qualify for the small-merchant exemption (monthly UPI receipts up to ₹1 lakh). Understand if your category falls under the flat ₹5 rate for essential sectors. Update your accounting systems to track the new cost from mid-October. Do not automatically add the MDR as a separate line item on customer invoices.
Frequently Asked Questions
Did the Supreme Court stop the UPI MDR charges?
The Supreme Court did not stop the charges. On 28 September 2026 it refused to grant an interim stay, which means the framework can proceed as scheduled from 15 October. At the same time, the Court has agreed to examine the petition on merits and has asked the Centre, RBI and NPCI to file detailed replies within four weeks. The legal process is therefore still ongoing, but the immediate rollout is not halted.
From which date will the 0.4% charge actually start?
The 0.4% MDR (and the flat ₹5 rate for essential sectors) is scheduled to apply from 15 October 2026 on eligible person-to-merchant UPI transactions above ₹2,000. This date remains in force after the Supreme Court’s decision not to grant a stay.
Will I be charged extra when I scan a QR code after 15 October?
You, as the customer, will not see any extra deduction from your bank account or UPI balance. The MDR is a cost settled between the merchant, the payment system participants and the banks. Your transaction amount will remain exactly the same as the bill amount you approve.
Are person-to-person transfers still free after the new rules?
Yes, person-to-person (P2P) transfers remain completely free irrespective of the amount. Whether you send ₹500 or ₹50,000 to a family member or friend, no MDR applies. The new charges are limited to specified merchant (P2M) transactions above ₹2,000.
Which merchants have to pay the MDR?
Merchants receiving UPI payments above ₹2,000 that do not fall under the small-merchant exemption (up to ₹1 lakh monthly UPI inflow) or the essential-sector flat-rate category will pay the standard 0.4% MDR (capped at ₹300). Essential sectors such as fuel, railways, telecom, insurance and agricultural inputs pay only a flat ₹5 on eligible transactions.
Is there a maximum limit on the MDR amount?
Yes. For standard merchant transactions, the 0.4% MDR is capped at ₹300 per transaction once the payment reaches ₹75,000 or more. This prevents the fee from rising indefinitely on very large tickets.
What did the government tell the Supreme Court?
The Centre informed the Court that approximately 96% of UPI users or transactions would remain exempt from the new MDR. It also clarified that the government itself does not receive the MDR amount; the charge is a settlement fee within the payments ecosystem. The Court noted that the matter appeared more technical than purely legal and sought detailed affidavits.
Can a shopkeeper force me to pay the MDR?
No. The framework places the MDR on the merchant. Adding it as a separate charge on the customer’s bill is not permitted. If a merchant attempts to do so, you can refuse to pay the extra amount, switch to another payment method, or raise the issue through consumer grievance channels.
Will the Supreme Court hear the case again?
Yes. The Court has kept the petition alive, issued notices, and directed the respondents to file replies within four weeks. After the affidavits are submitted, the matter will be listed for further hearing. Any future order could modify or clarify the framework, but until then the 15 October start date remains effective.
Closing Summary
The Supreme Court’s decision on 28 September means the new UPI MDR framework will start on 15 October 2026. For ordinary users, the change is minimal — person-to-person transfers and payments up to ₹2,000 stay free, and customers do not pay the merchant discount rate. The cost falls on eligible merchants for higher-value transactions. While the legal process will continue in the coming weeks, the practical position as of now is clear: charges begin on 15 October, and the majority of UPI usage remains unaffected for customers.
