The ₹2,000 threshold: a state-wise look at UPI

From 15 October, UPI will no longer be free for every merchant. Merchant payments above ₹2,000 will carry a 0.4% merchant discount rate (MDR), capped at ₹300, with a flat ₹5 fee for railways, telecom, insurance and fuel. Person to person transfers stay free, and small merchants receiving up to ₹1 lakh a month through UPI are exempt. The fee is charged on the merchant's side, not to customers.

How much the fee bites will depend on how large payments are and that varies widely across states. In August 2026, Maharashtra, India's largest UPI market, averaged just ₹1,166 per transaction, a sign that most of its payments are small and fall outside the fee. Andhra Pradesh (₹1,625) and Punjab (₹1,606) are at the other end. Nationally, payments above ₹2,000 have risen from 15.1% to 20.1% of merchant transactions since FY23, so the fee's reach is growing.

Note: Averages can only hint at who will pay. They mix person to person transfers with merchant payments, and 44% of UPI transactions are not assigned to any state. A definitive answer would need state-wise counts of merchant payments above ₹2,000, which NPCI does not yet publish.

IMA India’s Decoding India is a data-led series that explores the metrics shaping India’s economic and business landscape, presented through comparative visuals across Indian states or peer economies. The aim is simple: to make India’s progress easier to understand at a glance and to surface insights that matter for decision-makers.