UPI Fees Coming? What Your ₹0 Transfers Risk

Banks are quietly working on ways to stop merchants from charging you extra when you pay via UPI. Right now UPI is free for you, but if MDR returns, your ₹500 grocery bill could quietly become ₹505 at checkout.

Here's what happened: Indian Bank is developing internal mechanisms to prevent merchants from passing on UPI MDR charges to end consumers who pay digitally.. The bank is also exploring absorbing part of the MDR cost itself for merchants where it acts as the acquiring bank — protecting both sides.. UPI currently has zero MDR by government mandate, but industry debate on reintroducing some form of merchant fee has been ongoing since 2022..

What you should do: Check your UPI payment receipt at small shops — if you see any 'convenience fee' or 'digital surcharge', you are legally entitled to refuse and pay the base price.. Compare UPI-linked credit cards (like RuPay credit cards on UPI) — these earn rewards on the same zero-MDR rails and give you extra value at no cost.. Follow RBI and NPCI announcements on MDR policy — any change will be notified publicly and will affect every digital payment you make from day one..

RuPay credit cards linked to UPI are the only credit instruments that work on zero-MDR rails — you earn reward points while the merchant pays nothing extra. Most people don't know this combination exists.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.