The government and banks will decide how much subsidy should continue for UPI after merchant charges kick in. The Finance Ministry will hold talks with the Indian Banks’ Association on the amount and form of the support.

A 0.4 percent merchant discount rate will apply to certain UPI payments above Rs 2,000 from October 15, 2026. There is no proposal to delay the date.

The charge is paid by merchants, not customers. Person-to-person transfers and payments of Rs 2,000 or less stay free. The fee is capped at Rs 300 for transactions of Rs 75,000 or more.

The government has budgeted Rs 2,000 crore this year to promote RuPay debit cards and low-value BHIM-UPI transactions. Officials say the merchant fee alone will not cover the full cost of running the network.

Banks will set up a system to ensure merchants do not pass the charge to customers. The ministry will also talk to trader bodies to clear doubts.

Petroleum dealers had sought a waiver, but none is proposed. The question of GST on the fee will be left to the GST Council.