A new NPCI rule introduces fees on higher-value UPI merchant payments from October 15, 2026. Former BharatPe CEO Ashneer Grover says the cost will reach consumers regardless of official assurances.
From October 15, 2026 NPCI will apply a Merchant Discount Rate: 0.4% for person-to-merchant UPI transactions above Rs 2,000, with a minimum start of Rs 5 and a cap of Rs 300 for very large payments.
Certain sectors (railways, telecom, insurance, fuel) face a flat Rs 5 charge per transaction above Rs 2,000.
Ashneer Grover argues merchants will pass fees to consumers through higher prices or refusal of UPI, meaning customers ultimately bear the cost.
# What changed India (NPCI) has notified a new Merchant Discount Rate (MDR) for Unified Payments Interface (UPI) transactions, effective October 15, 2026. Under the rule, person-to-merchant UPI transactions above Rs 2,000 will attract a 0.4% fee. The fee has a lower bound that starts at Rs 5 and an upper cap of Rs 300 for large payments (noted at Rs 75,000 and above). Person-to-person transfers and payments under Rs 2,000 remain free.
Small merchants who receive less than Rs 1 lakh a month via UPI QR codes are entirely exempt. For sectors such as railways, telecom, insurance and fuel, the charge is a flat Rs 5 per transaction for payments above Rs 2,000.
# Why NPCI says it's needed NPCI's stated reason is operational: UPI's operating cost has increased to roughly Rs 20,700 crore and funds are needed for maintenance and expansion. The official position, repeated by the government, is that the fee is a merchant charge and will not affect consumers directly.
# Grover said Ashneer Grover, co-founder and former CEO of BharatPe, publicly criticized the change. He told Times Now that the claim UPI fees will not affect consumers is "merely a slogan." He used a petrol-and-tax analogy to argue that businesses ultimately pass added costs onto customers. His comments included a sharp line that he had "never seen anything more stupid," a remark that attracted wide attention and social media circulation.
# The practical dispute
Either outcome—higher prices or reduced acceptance of UPI—would change how consumers pay and how much they pay. The exemption for very small merchants lowers the immediate impact for micro-sellers, but larger merchants and certain service sectors will see direct transaction costs.
# What to watch next
# Bottom line
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