UPI is about to become a revenue line for banks. The real opportunity will follow
By Debiprasad Sarangi, CEO, iServeU
For most of a decade, UPI has been the most successful product Indian banks make no money from. Banks opened the accounts, kept the systems running, handled the disputes and absorbed the fraud losses, while every payment stayed free to the customer and the merchant. In August 2026 alone, UPI processed 24.51 billion transactions worth about ₹29.82 lakh crore. That is the biggest payments network in the country, and banks built it without a fee attached.
From October 15, 2026, they get one. The government has notified a 0.4% MDR on person-to-merchant UPI payments above ₹2,000, with a flat ₹300 fee on payments of ₹75,000 and above. Railways, telecom, insurance and fuel pay a flat ₹5, while person-to-person transfers and anything up to ₹2,000 stay free. Small merchants receiving up to ₹1 lakh a month through UPI are exempt. Merchants can’t add a surcharge to...
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