Fees, Price Drivers and 2026 Rules
What merchants pay to accept cards, UPI and wallets in India, what drives each charge and which RBI, NPCI and tax rules apply in October 2026.
merchant payment processing fees
Merchant payment processing fees in India, worked out in rupees
Every digital payment you accept has a price: a merchant discount rate on cards, a possible charge on larger UPI payments, wallet interchange, device rental, gateway fees, GST and the cost of waiting for settlement. These guides explain each charge, the 2026 rules behind it and how to choose the acceptance set-up that fits your business.
- Understand MDR on credit and debit cards, the statutory zero charge on RuPay debit and UPI up to ₹2,000, and the new UPI MDR on larger payments
- Calculate fees on a month's sales, estimate a monthly acceptance bill and test whether buying a POS or soundbox beats renting
- Check the rules at the source: RBI, NPCI, the Department of Financial Services, the Income Tax Department and CBIC
Start hereMDR Fee Calculator: What You Keep From a Month's Card Sales
Explore by topic
Cost Examples and Choosing an Acceptance Set-up
Worked monthly cost examples for Indian shops and online sellers, rental versus purchase sums for POS terminals and soundboxes, settlement and a method for comparing offers.
Failure Patterns, Disputes, Security and Official Sources
How merchants lose money on payments, how chargebacks and refunds work, card tokenisation, PCI DSS, data rules, surcharging and where to check the rules.
Start here
Cost Examples and Choosing an Acceptance Set-up
Choosing a payment acceptance set-up that fits: QR, soundbox, POS, tap-on-phone or gateway
A step-by-step method for Indian shops, service firms and online sellers to choose how to accept digital payments, based on ticket size, card mix, channel and cash flow.
Cost Examples and Choosing an Acceptance Set-up
Worked example: monthly card and UPI costs for a kirana store and a pharmacy
Line-by-line monthly payment acceptance costs for two Indian counter businesses, before and after the UPI MDR, with GST, devices and the effect of the card mix.
Fees, Price Drivers and 2026 Rules
Merchant payment processing fees in India (2026): MDR, UPI charges, devices and GST explained
What Indian merchants pay to accept cards, UPI, wallets and online payments in 2026, what drives each fee, which rules apply and how to estimate your own cost.
Failure Patterns, Disputes, Security and Official Sources
How merchants lose money on payment processing: 12 failure patterns and how to avoid them
Common ways Indian shops and online sellers overpay or lose money on card, UPI and gateway payments, from forgotten rentals and wrong rates to chargebacks and fake payments.
Fees, Price Drivers and 2026 Rules
UPI MDR above ₹2,000 (2026): the 0.4% charge, ₹300 cap, ₹5 categories and who is exempt
How NPCI's MDR on select UPI merchant payments above ₹2,000 works, the deferral to after Diwali 2026, P2PM exemption, flat-fee categories and worked examples.
Fees, Price Drivers and 2026 Rules
Zero MDR on RuPay debit and UPI: section 10A, the September 2026 notification and the ₹50 crore rule
Which payments merchants may not be charged for in India, what changed with the 2026 amendment and S.O. 5067(E), and when businesses must offer RuPay debit and UPI.
Tools
MDR Fee Calculator: What You Keep From a Month's Card Sales
Enter card or gateway sales, the MDR, any fixed fee per transaction and other monthly charges to see the total fee and what reaches your bank account.
Monthly Payment Acceptance Cost Estimator
Estimate a monthly low–high range for card, UPI and gateway fees from your digital sales, an illustrative cost band for your payment mix and your fixed monthly charges.
POS Terminal and Soundbox: Buy vs Rent Payback Calculator
Compare the upfront price of buying a POS terminal or soundbox with the rental you would otherwise pay, and see when buying pays back.
Payment Acceptance Offer Comparison Checklist
A checklist for Indian merchants comparing offers from banks, payment aggregators and gateways for cards, UPI, terminals and soundboxes.
Payment acceptance options compared: QR, soundbox, POS, tap-on-phone and gateway
| Set-up | How it usually charges | Tends to fit | Watch out for |
|---|---|---|---|
| Static UPI QR in a personal or small-merchant (P2PM) account | No charge to you or the customer; P2PM status depends on inward UPI credits staying within about ₹1 lakh a month | Street vendors, very small shops, home businesses | Moved to the P2M category if inward UPI credits exceed ₹1 lakh a month for three months in a row; no card acceptance |
| Merchant UPI QR from a bank or aggregator | No charge up to ₹2,000; select payments above ₹2,000 to carry 0.4% MDR (cap ₹300) once NPCI implements it | Shops, restaurants and services taking mainly UPI | Settlement terms, account fees, how the UPI MDR will be shown on statements |
| Soundbox (audio payment confirmation) | Monthly rental or one-time purchase, sometimes waived above a sales target; UPI charges as above | Busy counters where staff cannot check every phone screen | Rental that continues after you stop using it, SIM charges, device return terms |
| Card terminal (POS), rented | MDR per card type plus monthly rental, often waived above a sales target; UPI on the same device | Shops with regular card customers or higher ticket sizes | Blended rates, rental if you miss the target, minimum monthly fees, lock-in |
Frequently asked questions
What are typical merchant payment processing fees in India?
It depends on how the customer pays. RuPay debit cards and UPI payments up to ₹2,000 carry no charge by law. Other debit cards are subject to RBI caps (up to 0.9% for larger merchants, ₹1,000 maximum per transaction). Credit-card MDR is not capped; NPCI's 2026 FAQ describes it as typically 1.5% to 2.5%. Add device rental, gateway fees and 18% GST on the fees. See the fee overview.
Is UPI still free for merchants?
UPI payments up to ₹2,000 are free for every merchant by law, and small merchants under NPCI's P2PM framework (UPI credits up to about ₹1 lakh a month) pay nothing. For other merchants, NPCI has announced a 0.4% MDR on select payments above ₹2,000, capped at ₹300, with a flat ₹5 for categories such as fuel, insurance and utilities. On 13 October 2026 NPCI deferred the start to after Diwali; check the current date on npci.org.in.
Do I have to accept RuPay debit cards and UPI?
If your business's total sales, turnover or gross receipts exceeded ₹50 crore in the previous tax year, the Income-tax Act requires you to offer the prescribed electronic modes, which include RuPay debit cards and UPI. This was section 269SU of the 1961 Act and is section 187 of the Income-tax Act, 2025. Smaller businesses are not obliged but usually benefit from offering them.
Is GST charged on MDR?
Yes. MDR, gateway fees and device rentals are payment or financial services on which GST is charged, at 18% under the rates in force in October 2026. A registered business can usually claim the GST as input tax credit if the invoice carries its GSTIN. Where no charge is made, as for RuPay debit and UPI up to ₹2,000, there is no fee and so no GST.
Can I add a surcharge for card payments?
Be careful. RBI instructions say merchants should not pass debit-card MDR to customers, and NPCI says merchants cannot pass the UPI MDR to customers. Card network rules and most merchant agreements also restrict surcharges on credit cards. Any extra charge must be shown clearly before payment. Read your agreement and see the surcharge guide.
When will I receive the money from card and UPI sales?
Settlement terms are set in your agreement. Many bank and aggregator agreements settle on a T+1 working-day basis, and some offer same-day or instant settlement for an extra fee. The RBI Master Direction on Payment Aggregators requires the agreement to state settlement timelines transparently. See the settlement guide.
Is it cheaper to buy or rent a card machine or soundbox?
Buying pays back only if the rental you avoid, minus maintenance and SIM costs, recovers the price within the device's useful life, and only if you would not have had the rental waived anyway. Use the buy vs rent payback calculator with your own offer.
Can my online store save customers' card details?
No. Since 1 October 2022 RBI rules prohibit merchants and payment aggregators from storing actual card data; saved-card checkouts use tokens issued under the card-on-file tokenisation framework. The 2025 Master Direction on Payment Aggregators repeats that card credentials must not be stored in a merchant's systems. See tokenisation and PCI DSS.
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