What to do if shopkeeper asks for UPI charges payment?:Contact bank or visit ‘MyUPI Payment Portal’ – know your rights

According to an official FAQ document released by the National Payments Corporation of India (NPCI) titled “Merchant Discount Rate (MDR) on Select UPI (P2M) Transactions,” new rules regarding transaction charges on Unified Payments Interface (UPI) payments will take effect on 15 October, 2026. As UPI grows across the country—processing an astonishing 2,451 crore transactions worth ₹29.9 lakh crore in August 2026 alone—many citizens are asking whether shopkeepers can demand extra money when customers pay using QR codes or UPI apps. Can Shopkeepers Ask You to Pay UPI Charges? What Rights Do Customers Have? The short answer is no. According to the official policy document, merchants and shopkeepers who are onboarded to accept UPI payments are strictly prohibited from passing on any Merchant Discount Rate (MDR) charges to customers. When you buy goods or services at any store or shop, you are only required to pay the exact listed or posted price. Under the official guidelines, ordinary citizens and consumers have the following explicit rights: Zero Charges for Buyers: Everyday consumers will continue to make UPI payments completely free of cost. Free QR Code Scans: Scanning a QR code at local markets, street vendors, tea stalls, or retail shops involves zero fees for the customer, regardless of the purchase amount. No Platform Fees Allowed: UPI application providers like PhonePe, Google Pay, PayTM, etc are explicitly restricted from charging any platform fee or extra transaction fee on users for making payments. Free Person-to-Person (P2P) Money Transfers: Sending money to friends, family members, personal contacts, or between your own linked bank accounts is completely free of cost for both the sender and the receiver. No Monthly Transaction Caps: Individual users face no monthly quotas, volume limits, or tiered caps on free UPI transactions. What if shopkeeper insists you to pay UPI charges? If a shopkeeper asks for ₹2,008 instead of ₹2,000, the customer should refuse, ask for a receipt showing the base amount, and report it UPI apps and NPCI have grievance channels for exactly this. This is fixable. -Mahesh Shukla, Founder and CEO at PayMe Amit Bansal, Co-founder, VimanoTech says banks and payment service providers can address complaints where such instances are reported. He adds that the merchant is expected to absorb the MDR as a cost of accepting digital payments rather than adding it separately to the customer’s bill. If the merchant continues to insist on the additional charge, the customer can retain the transaction details and raise a complaint with their bank or UPI service provider through the available grievance mechanism. -Amit Bansal, Co-founder, VimanoTech According to the Reserve Bank of India (RBI) guidelines, no extra charges should be levied for UPI transactions. You have the right to refuse paying any additional charges. According to the government of India’s ‘MyUPI Payment Portal’ if the shopkeeper insists, you can report the issue of extra charges for UPI payments in the following manner: 1. Contact Your Bank: Reach out to your bank’s customer service through their helpline or mobile banking app. Provide them with details of the incident, including the merchant’s name and location if possible. Request them to take action against the merchant for violating RBI guidelines. 2. Use NPCI’s Grievance Redressal Mechanism: NPCI (National Payments Corporation of India) also has a grievance redressal mechanism. You can reach them through their website or helpline. 3. Social Media: Many banks and financial institutions are active on social media. You can tweet about your issue to the bank’s official handle with the hashtag #UPIIssue. Government and Banks Rule: Merchants Must Absorb the Cost The policy document clarifies that acquiring banks, payment aggregators, and regulatory bodies enforce rules to ensure shopkeepers do not pass on MDR charges to buyers. Under the policy framework, payment processing fees are standard business operational overheads. Merchants absorb these nominal costs because accepting digital payments increases customer footfall, drives higher sales volumes, and reduces physical cash-handling risks. Historical payment trends show that merchants absorb nominal digital processing costs to drive higher business volume. Payment acceptance costs are considered standard operational overheads that are offset by increased footfall, higher average ticket values, and reduced cash-handling risks. -Govt’s FQ on UPI charges Comparing Charges: UPI vs Credit Cards vs Debit Cards To keep digital payments affordable, the UPI and Services Steering Committee (headed by the NPCI) set UPI MDR rates much lower than traditional card processing fees. Here is how the Merchant Discount Rate (MDR) compares across different payment instruments according to the government’s official document: Standard Credit Cards: Standard credit card MDR typically ranges from 1.5% to 2.5% per transaction. Debit Cards: Debit card MDR is capped up to 0.90%. UPI (Person-to-Merchant): Baseline UPI MDR is set at just 0.4% for transactions above ₹2,000, and is capped at a maximum of ₹300 for high-value payments of ₹75,000 and above. All UPI transactions up to ₹2,000 carry 0% MDR. Because UPI processing is significantly cheaper than credit card processing, shopkeepers have no economic incentive to inflate retail prices or demand extra money from buyers, states the governent’s FQ document. How Much MDR Applies to Auto-Debit and Capital Markets (Mutual Funds)? The document sets specific guidelines for automated recurring transfers and investment payments: Auto-Debit Recurring Payments (UPI AutoPay / Mandates): Automated recurring standing instructions used for monthly utility bills, OTT streaming subscriptions, and recurring investments do not carry any prescribed MDR transaction charges. Capital Market Transactions (Mutual Funds Demat Accounts): Fund transfers made toward Mutual Funds (Asset Management Companies), SEBI-registered stockbrokers, securities dealers, and investment platforms carry a special, low MDR rate of 0.02% of the transaction value, with an absolute maximum cap of ₹300. This lower rate is designed to encourage retail participation in formal financial markets. Which Shopkeepers Are Outside vs Inside the ₹2,000 MDR Threshold? The government and NPCI framework separates shopkeepers into clear categories so that small vendors incur no payment costs: Shopkeepers Kept OUTSIDE the ₹2,000 MDR Threshold (Zero MDR): Small Local Vendors (P2PM Tier): Micro-merchants operating under the Person-to-Person-Merchant (P2PM) account classification who collect up to ₹1 lakh per month through UPI QR codes enjoy a mandatory 0% MDR. Payments Above ₹2,000 for Small Vendors: If a small vendor operating under the P2PM category receives a single payment above ₹2,000, they are still not charged any MDR because eligibility is determined by overall merchant account classification. All Small-Value Transactions Under ₹2,000: Every merchant or shopkeeper—regardless of size—pays 0% MDR on any transaction worth ₹2,000 or less. This covers over 95% of all UPI P2M transaction volume in India. Examples of P2PM Merchants Shopkeepers Kept INSIDE the ₹2,000 MDR Threshold (Subject to Nominal Fee) Regular Commercial Businesses (P2M Tier): Established commercial businesses receiving payments above ₹2,000 pay a nominal 0.4% MDR. Capped High-Value Payments: For large purchases of ₹75,000 and above, the fee stops at a fixed maximum cap of ₹300. For example, a purchase of ₹1,00,000 incurs a fixed fee of ₹300 instead of a 0.4% charge of ₹400. Special Flat-Rate Industry Sectors: Specific essential sectors pay a flat fee of ₹5 per transaction for payments above ₹2,000 instead of a percentage rate. These designated sectors include railways, fuel purchases at petrol pumps, electricity and municipal water utility bills, insurance premium payments, and educational institution tuition fees. All transactions under ₹2,000 in these specialized sectors remain completely free of MDR.