Is UPI free for merchants?
Yes for now, but not for long. NPCI has announced a 0.4% fee capped at Rs 300 on merchant payments above Rs 2,000, with flat Rs 5 fees for categories such as fuel and insurance. Payments up to Rs 2,000 and small merchants receiving up to Rs 1 lakh a month by QR code stay exempt. The fee was due on October 15, 2026, but NPCI deferred it until after Diwali, and the new date had not been announced by late October 2026.
In detail
Yes for now, but not for long. NPCI has announced a 0.4% fee capped at Rs 300 on merchant payments above Rs 2,000, with flat Rs 5 fees for categories such as fuel and insurance. Payments up to Rs 2,000 and small merchants receiving up to Rs 1 lakh a month by QR code stay exempt. The fee was due on October 15, 2026, but NPCI deferred it until after Diwali, and the new date had not been announced by late October 2026.
How people pay in India in 2026
Online, merchants also offer net banking, wallets and cash on delivery, which remains common outside large cities. NPCI planned a 0.4% merchant fee, capped at Rs 300, on UPI payments above Rs 2,000 from October 15, 2026, but deferred it until after Diwali; by late October 2026, NPCI had not yet announced the new date. For PSPs and merchants, India is a UPI-first market with a long card and cash tail.
Payment by digital wallet and X-Pay in India
In India, the main digital wallets are UPI apps. In August 2026, PhonePe handled 45.6% of UPI transactions, Google Pay 32.3% and Paytm 8.0%, according to NPCI data compiled by StartupTalky.
More detail in our #PayWorldTour guide Payment methods in India.