Athira Sethu
Kochi, 16 Sep 2026
The shares of several payment and bank companies increased on September 16 due to the imposition of a fresh charge on certain UPI transactions by NPCI.
Starting October 15, a charge of 0.4% Merchant Discount Rate (MDR) will be imposed for certain UPI transactions over ₹2,000. But the new charge would not be applicable to customers.
This new MDR would be applicable only when a customer makes payments to merchants using UPI transactions. The payment must be above ₹2,000. Personal-to-personal (P2P) transactions will continue to remain absolutely free.
It has also been made clear by the Finance Ministry that there will be no restriction or limit for UPI transactions done by customers. UPI transactions over ₹2,000 to merchants will also remain free.
How Will This New Charge Be Levied?
The new charge of 0.4% will apply on merchant payments exceeding ₹2,000. The funds raised from the charge will be distributed amongst all partners of UPI payments.
There is also going to be a fixed charge of ₹5 on certain priority sectors for merchant payments exceeding ₹2,000. This includes railways, telecommunications, insurance, fuel, and agricultural products.
Other charges which will come under the fixed ₹5 charge scheme include electricity, water, and piped gas bill payments and education fees in schools and colleges for amounts exceeding ₹2,000.
For all mutual fund, securities, and stockbroker-related payments, the charge is 0.02%, capping at ₹300.
P2P Payments to Remain Free of Charge
All P2P transfers from one person to another will be exempt from any UPI charge, irrespective of the amount.
Small payments of merchants up to ₹2,000 will also continue to remain free of charge. These small payments account for more than 95% of merchant UPI payments according to the government.
Increase in Payment and Bank Stocks
After the news, stocks of a few companies saw an increase.
The parent company of Paytm, One 97 Communications, saw a rise of more than 1%. YES Bank’s stock increased by over 3% and that of State Bank of India (SBI) by over 1%. Bank of Baroda’s stock saw an upward trend as well.
According to analysts, the new MDR regime may help generate an additional revenue stream for payment companies and banks. Companies like Paytm, Pine Labs, One Mobikwik and YES Bank would see the benefits.
In general, the new regime is more about generating revenue for the payments sector while keeping UPI free for consumers in most of their transactions.
