UPI Fee Above ₹2,000: Will You Pay 0.4%?

RBI has proposed a 0.4% Merchant Discount Rate on UPI transactions above ₹2,000. If passed, large UPI payments — rent, school fees, medical bills — could carry a small fee for the first time since UPI launched in 2016.

Here's what happened: RBI has proposed a 0.4% Merchant Discount Rate (MDR) on UPI transactions exceeding ₹2,000, citing the need for long-term sustainability of India's digital payments infrastructure.. UPI has carried zero MDR since January 2020, when the government scrapped the fee to drive adoption — making this the first serious policy reversal in over five years.. The charge would apply to large-value everyday payments like rent, medical bills, school fees, and bulk grocery purchases — categories where UPI use has grown sharply..

What you should do: Check whether your regular large payments — rent, school fees, utility bills — are above ₹2,000 and calculate your potential monthly cost if merchants pass on the 0.4% fee.. Ask your landlord or service provider in advance whether they will absorb the MDR or add it to your invoice — get it in writing before the rule takes effect.. Compare alternatives: NEFT and RTGS remain free for account holders at most banks for online transfers — keep them as a backup for high-value payments where UPI costs may apply..

Splitting a large payment into two transactions below ₹2,000 may avoid MDR — but confirm the threshold rules once the final RBI circular is published, as anti-splitting clauses could apply.