UPI Free for You: But 3 Merchant Changes Coming?

The government confirmed UPI users will never pay transaction fees. But a quiet MDR policy shift for large merchants could change how some businesses accept UPI — and that could affect your everyday shopping experience.

Here's what happened: The Finance Ministry officially stated that consumers making UPI payments will not face any transaction charges, removing ambiguity around MDR for users.. All person-to-person UPI transfers — sending money to family, splitting bills, paying friends — will continue to be free with no exceptions.. MDR (Merchant Discount Rate) may apply only to select large merchants in a revised framework, leaving small and micro merchants fully exempt..

What you should do: Pay via UPI without worry — no legitimate merchant or app can legally deduct a transaction fee from your payment amount under current RBI guidelines.. Check your UPI payment history for any unexplained deductions; if you spot a 'convenience fee' on P2P transfers, report it to your bank immediately.. Compare your payment app options: NPCI-authorised UPI apps like GPay, PhonePe, and Paytm remain free for consumers — stick to these for daily transactions..

If a merchant ever quotes you a higher price for UPI versus cash, that's a violation of RBI's zero-MDR mandate for small merchants — you can refuse and report it to your bank's grievance portal.

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