UPI payments to attract charges from October 15, hitting fuel, power bill payments

UPI payments have so far been completely free, but this will change from October 15, 2026. The central government has decided to impose charges on UPI payments, and according to the National Payments Corporation of India's (NPCI) FAQ, the rule will come into effect from that date. In simple terms, if an ordinary person pays a petrol pump, an electricity bill or any bill above 2,000 rupees through UPI, they will have to pay a charge of 5 rupees on every transaction.

Earlier this charge was limited to large merchants, but the government's new decision means it will now affect the pockets of ordinary people as well. The charge will apply on transactions above 2,000 rupees.

A separate arrangement has been made for petrol pumps, electricity and some other essential services. Instead of the usual 0.4 percent merchant discount rate (MDR), a fixed charge of up to 5 rupees has been set for certain essential services. This includes categories such as petrol pumps, telecom, insurance and railways. This means if the bill for these services is above 2,000 rupees and payment is made through UPI, 5 rupees will be deducted on every payment. The same 5 rupee rule will also apply to electricity, water and piped gas bills.

A rate of 0.02 percent, with a maximum cap of 300 rupees, has been fixed for mutual fund and stock market payments. However, MDR will not apply on some auto-debit payments.

According to NPCI, running the UPI network, maintaining servers and preventing fraud costs around 20,000 crore rupees every year. Government support has played a major role in UPI's success so far. In August 2026, UPI recorded around 2,451 crore transactions with a total value of nearly 29.9 lakh crore rupees.

The origin of this rule is also notable. Parliament passed the Tax and Other Laws Reforms Bill 2026 in the monsoon session. Following this, on September 14, the government issued a notification giving legal cover for charges on UPI payments and RuPay debit card payments up to 2,000 rupees. The responsibility for setting rates for payments above 2,000 rupees has been given to the UPI Steering Committee.

Some key questions remain unanswered in this matter. It is not yet clear whether GST will apply on the MDR, what share of the earnings from this charge will go to banks, UPI apps and NPCI, and what action will be taken if a shopkeeper collects this charge from customers.