No official charges on UPI, yet extra fees are being demanded from vendors – Survey

Although the Merchant Discount Rate (MDR) charge for UPI has not yet been implemented, a survey by the Indian School of Business (ISB) reveals that 10.4% of vendors are being asked by their suppliers to pay extra for transactions made via UPI. Here is the full story.

Until now, making payments via UPI has been easy and free for users. However, the ongoing discourse surrounding potential UPI charges is already affecting small shopkeepers and street vendors. Surprisingly, even though the proposed charges for UPI have not yet come into effect, some vendors are already being asked to pay additional amounts for accepting digital payments—a finding highlighted in a survey by the Indian School of Business (ISB).

According to the survey, approximately one in every 10 vendors reported that their suppliers demanded an extra charge for payments made through UPI. In other words, even though these shopkeepers are not yet directly subject to official UPI charges, they are facing additional costs imposed by their suppliers.

How many vendors were surveyed?

The survey was conducted by the ISB’s Centre for Analytical Finance between September 24 and October 10, 2026. It covered 722 vendors across 64 cities and towns in 14 states and union territories. The findings indicate that 10.4% of these vendors were asked by their suppliers to pay extra for UPI-based transactions within the preceding 10 days.

The report notes that many suppliers are explicitly informing vendors that using UPI will incur an additional charge, whereas no such extra cost applies if payments are made in cash. This could lead to increased operational costs for small shopkeepers.

What will the charges on UPI be? In fact, there is a proposal to introduce an MDR (Merchant Discount Rate) on UPI payments. Under this, certain large merchants would be required to pay a 0.4% charge on specific UPI transactions exceeding ₹2,000, with the charge capped at a maximum of ₹300. Meanwhile, for certain categories—such as railways, fuel, and education—a flat charge of ₹5 is proposed for transactions above ₹2,000.

This system was initially scheduled to come into effect on October 15; however, the National Payments Corporation of India (NPCI) has deferred it until after Diwali. A new date for its implementation has not yet been announced.