UPI new rules from Oct 15: Will your festive shopping bill get more expensive?

Retailers may raise prices or reduce discounts this festive season as a new 0.4% fee on UPI transactions over ₹2,000 takes effect from October 15. Although the charge cannot be directly passed to consumers, businesses may still adjust final prices accordingly.

Your shopping bills might get slightly higher this festive season as retailers consider raising prices or offering fewer discounts to offset a new fee on high-value UPI transactions.

From October 15, a 0.4% Merchant Discount Rate (MDR) will apply to UPI payments above ₹2,000, capped at ₹300 per transaction. While the government has specifically stated that the charge cannot be passed directly on to consumers, retailers are still considering adding an additional cost that could influence final prices.

For example, if a customer pays ₹10,000 for a purchase through UPI, the merchant-level charge would be ₹40. Similarly, for a ₹50,000 transaction, it would be ₹200 (depending on the applicable cap).

Whether your bill will increase depends on whether a business passes the costs on to customers.

Ending nearly six years of a fully free Unified Payments Interface (UPI) network for merchants, the government on Tuesday introduced a 0.4 per cent transaction fee on payment above ₹2,000, capped at ₹300 for payments of ₹75,000 and above, from October 15, while explicitly ring-fencing everyday person-to-person transfers from any charge.

The carefully calibrated move signals the end of an era for the world's largest real-time payments system even as the government tries to avoid alarming the hundreds of millions of users who use it daily.

Person-to-person (P2P) transfers - which make up 37 per cent of UPI's transaction volume and 70 per cent of its transaction value - will continue to attract zero charges, irrespective of size. Small-value transactions up to ₹2,000, which the government said account for more than 95 per cent of total P2M volume, remain untouched.

"Charges will apply only to person-to-merchant (P2M) transactions exceeding ₹2,000," the finance ministry said in a statement. "A nominal merchant discount rate (MDR) of 0.4 per cent will be levied on P2M transactions above ₹2,000. This commission will be shared amongst the payment ecosystem partners including banks and app providers."

In August, UPI processed a total of 24.5 billion transactions worth 29,823 billion rupees for more than 550 million users, official data show.

UPI has a share of 84% in India's digital payments by volume and a 49% share of global real-time payment volumes, the government said on Tuesday.

Walmart's PhonePe and Alphabet's GooglePay had about 80% market share by value of UPI transactions in August.

Sanchari Ghosh is an Assistant Editor at Mint with over 12 years of experience in journalism, specialising in personal finance, DLT & DeFi, geopolitics and foreign policy, with a particular emphasis on how these areas intersect. She writes extensively about how money works in everyday life—helping readers navigate personal finance decisions. As AI reshapes investing behaviour, capital is increasingly flowing into decentralized ecosystems, redefining how assets are managed, traded, and valued. She focuses on explaining how money flows within frameworks like Distributed Ledger Technology (DLT), DeFi protocols, and crypto markets—while also exploring what the future of money could look like in a trustless, programmable financial world. She also focuses on immigration-related issues, simplifying complex topics around visas, passports, overseas financial planning, and the many practical challenges Indians face while moving or living abroad. Alongside personal finance, Sanchari has a strong understanding of international politics, contemporary and historical conflicts, and global state decisions. She closely tracks how geopolitical developments influence economies, markets, and individual financial choices, bringing together finance and global affairs in her reporting. She began her career as a desk editor, which gave her a strong foundation in news writing. Over time, her interest naturally shifted toward personal finance. Before joining Mint in 2020, she worked DNA, The Times of India, Outlook Money, BloombergQuint, and ETMoney. At Mint, she got an opportunity to expand her coverage to include immigration and geopolitical developments while continuing to closely follow personal finance trends and market movements.As a journalist, she is committed to accuracy, intellectual rigour, and fairness. She is an English Major and her work took her across cities including Delhi, Mumbai, and Pune. Living independently from an early age gave her firsthand experience in managing life and money on her own. This practical exposure sparked her strong interest in personal finance. Outside the newsroom, Sanchari is a sports enthusiast who regularly plays lawn tennis and squash. In her younger years, she was also a national-level badminton player.