UPI Merchant Charges: What Online Sellers Should Check Now

UPI has become the default way many Indian customers pay online. Reports in late September said that from 15 October 2026 a 0.4% merchant discount rate (MDR) would apply to specified person-to-merchant UPI payments above ₹2,000, while person-to-person transfers stay free and small payments and small-merchant transactions under the zero-MDR framework were said to remain free.

Important: the details below come from secondary articles that did not link to an NPCI circular or government notification, and the scope of "specified" transactions was unclear. Confirm exactly what applies to you with NPCI's notifications, your bank and your payment gateway before changing prices or checkout.

Why this matters to online sellers

If a charge applies to your higher-value orders, it affects your margin. On a ₹10,000 order, 0.4% would be ₹40. It is small per order, but it adds up across thousands of orders, and it changes the maths on thin-margin products.

What to check this week

1. Ask your payment gateway in writing. Request your current rate card for UPI, and ask whether any new MDR applies to your merchant category and order values from 15 October.
2. Check your settlement statements. Compare the fees charged before and after the date.
3. Review your pricing. Work out your margin on orders above ₹2,000 for each payment method.
4. Check the rules before adding surcharges. Whether and how you can pass payment costs to customers depends on regulations and your agreements. Do not add a surcharge without confirming it is allowed and clearly disclosed.
5. Compare payment options. Cards, net banking, wallets, EMI and cash on delivery have different costs and risks. Do not push customers toward an option that increases failures.
6. Update your finance workflow. Make sure your accounting or ERP records the fees correctly for reconciliation and GST.

Other UPI points reported

• Standard UPI limit of around ₹1 lakh per transaction, with higher limits for some categories such as tax payments and IPO applications. Banks can set lower limits.
• A reported increase in the biometric authentication limit before a transaction, from ₹5,000 to ₹10,000, from 7 August 2026, depending on bank and app.

Treat these as general indicators, and check with your bank.

Protect conversion at checkout

• Keep UPI prominent, since customers trust it.
• Support intent flow and QR on mobile, and make payment status clear.
• Show failed-payment recovery: retry, switch method, and an easy way to check status.
• Send order confirmations by email and WhatsApp.
• Reconcile daily so unpaid or duplicate orders are caught early.

Think beyond the fee

Failed payments, chargebacks and slow settlements can cost more than a fraction of a percent. A reliable checkout with good recovery flows often matters more than shaving a basis point.

Talk to your developer

If you run an e-commerce site, ask whether your checkout shows fees clearly, handles failed payments well and records gateway charges for reconciliation. KalzTech builds and improves e-commerce checkouts and payment integrations. Contact us.