UPI Merchant Fee Starts October 15: What Indian Online Stores Should Do Before Diwali
October 1, 2026
If you run an online store in India, circle October 15. From that day NPCI will start charging merchants a small fee on certain UPI payments, something UPI merchants haven’t had to think about for years. It lands a few weeks before Diwali, which is the worst possible time to find out your numbers don’t work.
Before anyone panics, three things. Customers don’t pay it. The Finance Minister has said plainly that it’s the merchant’s charge. And small shops collecting through a UPI QR code, up to ₹1 lakh a month, are exempt. For a lot of small businesses, this changes nothing at all. For online stores selling higher-value orders, it deserves an afternoon of your attention.
What the fee actually is
It’s 0.4% on UPI payments to merchants above ₹2,000. Once a payment reaches ₹75,000 the fee stops growing and is capped at ₹300. A few categories (railways, telecom, insurance and fuel) pay a flat ₹5 instead. Anything at or under ₹2,000 isn’t charged.
In rupees, that works out like this:
| Order value | Fee |
|---|---|
| ₹1,800 | nothing |
| ₹2,500 | ₹10 |
| ₹10,000 | ₹40 |
| ₹50,000 | ₹200 |
| ₹75,000 and above | ₹300 (capped) |
The rule itself is simple. What’s less simple is how it reaches you if you take payments through an online gateway. Your provider might show it as a separate line, fold it into its own rate, or absorb part of it, and that’s their call, not NPCI’s. So the honest answer to “what will this cost me?” is that you need to ask them.
Does it affect you?
If you’re a neighbourhood shop or a service business taking most payments by QR, probably not. The exemption was written for you.
If you sell gifting sets, appliances, furniture, jewellery or anything else where the average basket crosses ₹2,000, then yes, and Diwali is exactly when those baskets get bigger. Take a made-up store doing 1,500 UPI orders a month at an average of ₹3,500. That’s ₹14 an order, or about ₹21,000 a month in fees it didn’t pay last month. Not catastrophic, but it’s real money, and on thin margins it comes straight out of profit.
What I’d do this week
Start by writing to your payment gateway. Ask whether your pricing changes on October 15, how the 0.4% will appear on your settlement reports, and whether any of it will be absorbed. Get the answer in writing so your accountant isn’t guessing at month-end.
Then look at your own data. Pull the last 90 days, count the UPI orders above ₹2,000 and add them up. Ten minutes in a spreadsheet will tell you whether this is a rounding error or a line item worth planning around.
After that, decide what you’ll do about it before the traffic arrives, not in the middle of a sale. You can absorb it, nudge prices slightly, or steer some bigger orders toward another payment method. If you’re thinking of adding a surcharge or a payment-method discount, check with your gateway first what’s actually allowed. Don’t build it into checkout on a hunch.
What I wouldn’t do is hide UPI or take it away. Customers aren’t paying the fee, and UPI is still how most Indian shoppers expect to pay. A buried or clunky UPI option will cost you far more in abandoned carts than 0.4% ever will. Early reporting suggests NPCI expects volumes to hold and that only around one in ten merchants may pass the cost on, though that’s a signal, not a guarantee.
Finally, run a full UPI payment on an ordinary mid-range phone over mobile data before October 15 and again after. Our Diwali E-Commerce Checklist covers the rest of the pre-season testing.
The WhatsApp change that arrives at the same time
If you send order updates or support replies through the WhatsApp Business API, usually via a provider, Meta is changing the pricing too. Each business number gets 1,000 free support replies a month, and after that each reply costs about ₹0.115. Order and delivery updates sent inside the 24-hour chat window will stop being free as well.
The regular WhatsApp Business app isn’t affected. If that’s what you use, carry on. If you’re on the API, estimate your monthly replies now, because a busy Diwali week can eat through 1,000 quickly, and ask your provider how it will be billed. Not sure which one you’re on? Our piece on WhatsApp vs a contact form explains where each one fits.
Dates worth knowing
The GST Council meets on October 7 and is expected to take a view on GST applying to the new fee. Worth watching, but don’t change anything over a rumour. The fee itself starts October 15. Diwali follows in early November.
Also in this month’s batch of changes: the income tax filing date for taxpayers whose accounts need an audit has moved to November 21, with the audit report due by October 21. And some appliance makers have signalled price rises of roughly 5 to 8 percent from October 1, which matters if that’s your category.
Where that leaves you
This fee is narrower than the headlines make it sound. Customers aren’t charged, small QR merchants are exempt, and what’s left is a fraction of a percent on higher-value payments. The stores that get hurt will mostly be the ones who find out on October 15 that their gateway, pricing or checkout was never set up for it.
If you’re heading into Diwali and want someone to look over your checkout, payments and hosting before the rush, that’s what we do. Have a look at our Diwali launch offer or get in touch.
Sources: NPCI’s announcement as reported by Bombay Samachar and RetailIntel; the October 1 changes as summarised by Digit. Rules and dates can change, so confirm current details with NPCI and your payment provider before acting.