UPI Charges from January 2027? Here’s What You Need to Know

The rollout of Merchant Discount Rate (MDR) charges on selected UPI transactions may be delayed until January 1, 2027. The new system was earlier scheduled to come into effect from October 15, 2026.

According to reports, the National Payments Corporation of India (NPCI) is considering the delay after requests from merchants, fintech companies and payment firms. The move could give businesses more time to prepare for the new payment system, especially during the busy festive season.

What is the proposed UPI charge?

Under the proposed MDR system, a 0.4% charge will apply to certain UPI payments made to merchants when the transaction value is above Rs 2,000. For transactions of Rs 75,000 or more, the charge will be capped at Rs 300.

For example, a 0.4% MDR on a Rs 10,000 eligible merchant transaction would be Rs 40.

Will customers have to pay the UPI charge?

No. The MDR is a merchant-side charge and is not supposed to be directly collected from customers. Person-to-person UPI transfers will remain free. UPI merchant payments up to Rs 2,000 will also remain free.

The government has said that around 96% of merchant UPI transactions will remain unaffected by the new MDR framework.

Why is the rollout being delayed?

The proposed delay comes ahead of the festive shopping season, when UPI transactions usually increase. Merchants and payment companies have sought more time to understand the new charges and make necessary changes to their systems.

If approved, the MDR rollout could move from October 15, 2026, to January 1, 2027. However, NPCI has not yet taken a final decision on the delay.

For now, customers can continue using UPI as usual without paying a direct MDR charge.