# India adds fees to big UPI payments for first time

> India's payments regulator will charge 0.4% on digital transactions over $20.80 starting October, marking a major shift for the free payment system.
- Title: India adds fees to big UPI payments for first time | Shortify
- Summary: India's payments regulator will charge 0.4% on digital transactions over $20.80 starting October, marking a major shift for the free payment system. India is…
- Keywords: india, npci, upi, unified payments interface, merchant discount rate, digital payments, reserve bank of india, transaction fees, fintech, payment systems, business, finance
- Source: Yahoo Finance — https://finance.yahoo.com/economy/policy/articles/india-npci-introduce-0-4-123239365.html
- Published: 2026-09-16T12:32:39+00:00
- Read time: 1 min
- Topics: india, npci, upi, unified payments interface, merchant discount rate, digital payments, reserve bank of india, transaction fees, fintech, payment systems, business, finance
## India charges for big digital payments
Starting October 15, India's NPCI will charge a 0.4% fee on UPI transactions over 2,000 rupees, or about $20.80. This is the first time the free payment system has introduced charges.
## UPI handles massive transaction volume
UPI processed 24 billion transactions worth $311 billion in August alone, making it one of the world's largest digital payment systems by volume.
## Fees vary by merchant type
Railways, telecom, insurance, and fuel merchants pay a flat 5-rupee fee. General merchants face 0.4% charges capped at 300 rupees on transactions over 75,000 rupees. Capital markets pay just 0.02%.
## Small merchants and rural areas exempt
Merchants earning up to 100,000 rupees monthly through UPI QR codes won't pay fees. QR-code transactions in rural and semi-urban areas also remain free.
## Revenue funds system improvements
NPCI says fee revenue will support system resilience, technology innovation, cybersecurity, and customer service. Banks must ensure merchants don't pass charges to customers.

> A fair and appropriate distribution of MDR across ecosystem participants will support continued investment in technology, infrastructure and acceptance networks.
## Key takeaway

India is introducing its first-ever fees on high-value UPI payments to fund system improvements, while protecting small merchants and rural users from charges.