UPI Payment Rules: Will petrol pumps and grocery stores charge you extra?

The government has announced new UPI payment rules. Will you pay extra charges when you scan QR codes at petrol pumps and grocery stores? Read the full details here.

UPI Payment Extra Charges At Petrol Pumps And Grocery Stores

The Finance Ministry shared an important update on X for digital India users. A new Merchant Discount Rate (MDR) for UPI will start on October 15, 2026. The government applies this rule only to specific Person-to-Merchant (P2M) transactions above Rs 2,000. Regular customers can breathe easy because UPI payments remain completely free for them.

UPI Payment Extra Charges At Petrol Pumps And Grocery Stores

The Finance Ministry statement lists several merchant and sector-specific transactions above Rs 2,000 that will attract MDR. These include regular merchant payments, railway tickets, telecom or mobile recharges, insurance premiums, and petrol or diesel payments. The rule also covers agricultural products like seeds and fertilizers above Rs 2,000. Mutual fund payments, securities, stock broker fees, and stock market dealer payments fall under this bracket too.

UPI Payment Extra Charges At Petrol Pumps And Grocery Stores

Different sectors have different MDR rates. Regular merchant payments above Rs 2,000 will attract a 0.4% charge. The government capped this fee at Rs 300 for payments of Rs 75,000 and above. Essential sectors like railways, petrol, insurance, and telecom operate on low margins. These sectors will pay a flat fee of Rs 5 instead of a percentage. Capital market and mutual fund payments will attract a 0.2% standard MDR, capped at a maximum of Rs 300.

UPI Payment Extra Charges At Petrol Pumps And Grocery Stores

The government completely exempted small merchants from this rule. Small vendors earning up to Rs 1 lakh per month via QR codes will not pay any transaction fees. The Finance Ministry clarified that merchants will bear this MDR burden, not the customers. Banks and apps like Google Pay or PhonePe cannot collect platform fees or hidden charges from users. The ministry strictly ordered merchants not to pass this fee to customers. Person-to-Person (P2P) payments and merchant payments up to Rs 2,000 will continue with 0% MDR. This means the new rule will not affect 96% of merchant transactions in the country.