New UPI Charges From October 15: What UAE NRIs Need to Know Before Paying
By Chris
UAE-based Indians who regularly use UPI in India should know about an important change coming from **October 15, 2026**.
India is introducing a new **Merchant Discount Rate (MDR)** on selected UPI payments made to merchants above **₹2,000**. But there is an important detail: **customers are not supposed to pay this new charge**.
The fee will be borne by eligible merchants accepting the payment, while person-to-person transfers—including sending money to family members—will remain free.
## **What changes from October 15?**
From October 15, eligible person-to-merchant UPI transactions above ₹2,000 will attract an MDR of **0.4%**.
The charge is capped at **₹300**, meaning the maximum standard MDR is reached when a transaction hits ₹75,000.
For example, on a ₹3,000 eligible merchant payment, the merchant would pay ₹12 in MDR. On ₹10,000, the MDR would be ₹40. On ₹50,000, it would be ₹200, while payments of ₹75,000 or more would hit the ₹300 cap.
The customer should still pay only the actual purchase amount.
## **Will UAE NRIs have to pay extra?**
No, not because they are NRIs.
If a UAE-based Indian makes an eligible UPI payment to a merchant in India, the new MDR is charged within the merchant payment system rather than added as a fee to the customer.
India’s Finance Ministry has said merchants should not pass the MDR on to customers, while UPI providers are not permitted to introduce a separate customer platform fee for these transactions.
So, if you buy something for ₹10,000 using UPI, you should still pay **₹10,000**, not ₹10,040.
## **What about UPI payments of ₹2,000 or less?**
Eligible merchant payments of **₹2,000 or less remain free from the new MDR**.
A payment of exactly ₹2,000 also does not attract the 0.4% MDR because the new charge applies only when the transaction exceeds ₹2,000.
## **Sending money to family remains free**
This is particularly important for UAE NRIs.
Normal **person-to-person UPI transfers remain free**, regardless of the new merchant-payment threshold.
That includes sending money to parents or relatives, splitting expenses with friends, transferring money between your own eligible Indian accounts and receiving money through a personal UPI ID.
The ₹2,000 threshold applies to eligible merchant transactions, not ordinary personal transfers.
## **Small merchants are also protected**
Not every Indian shop accepting UPI will pay the new fee.
Small merchants operating under the P2PM category and receiving up to **₹1 lakh per month through UPI QR payments** will remain under the zero-MDR framework.
A merchant who crosses the applicable limits and is classified as a commercial P2M merchant can become subject to the new charges.
This means many small neighbourhood shops and vendors can continue accepting UPI without paying the new MDR, provided they remain within the applicable classification.
## **Fuel, insurance and utility payments get different treatment**
Some sectors will have a concessional fee rather than the standard 0.4% MDR.
Eligible UPI transactions above ₹2,000 for **fuel, railways, telecom and insurance** will generally attract a flat **₹5 merchant charge**.
Public utility payments above ₹2,000, including electricity, municipal water and piped natural gas, also fall under the concessional structure.
Again, this is a merchant-side processing cost—not an additional ₹5 that customers should be charged at checkout.
## **What about investments through UPI?**
Capital-market transactions have a separate rate.
Customer-initiated UPI payments to mutual funds, stockbrokers, securities dealers and eligible investment platforms will attract an MDR of **0.02%**, capped at ₹300.
The relevant financial institution or investment platform bears the charge rather than the investor.
Meanwhile, recurring payments made through **UPI Mandates or AutoPay** are exempt from the newly prescribed MDR framework.
That can include recurring investments such as SIPs and scheduled subscriptions or bill payments.
## **What about UPI-linked RuPay credit cards?**
UPI payments funded directly from a bank account fall under the new 0.4% framework where applicable.
Payments funded through a **RuPay credit card linked to UPI** or a pre-approved credit line operate under separate charging rules.
So simply seeing the UPI logo does not tell you which MDR structure applies—the underlying source of funds matters too.
## **Can UAE NRIs use UPI with a +971 number?**
Yes, provided both the bank and UPI application support international mobile-number registration.
Eligible NRIs can link supported **NRE or NRO bank accounts** to UPI using international mobile numbers, including UAE numbers beginning with **+971**.
The usual process involves linking the UAE number to the eligible Indian bank account, using a supported UPI app, completing verification and creating or confirming the UPI PIN.
According to the latest guidance cited by Gulf News, supported institutions include major banks such as SBI, HDFC Bank, ICICI Bank, Axis Bank, Federal Bank, Canara Bank, Punjab National Bank, South Indian Bank and Yes Bank, although availability varies by app and bank.
## **What if you use UPI while physically in the UAE?**
This is where UAE residents should understand the difference between **MDR and international payment costs**.
UPI is accepted at selected UAE merchants through cross-border arrangements involving NPCI International and local payment networks.
If you use an Indian UPI account to make a payment at a UAE merchant, currency conversion or cross-border processing charges may still apply.
Those costs are **separate from the new Indian merchant MDR starting October 15**.
Before approving the payment, check the amount shown in both dirhams and rupees, the exchange rate and any additional fee displayed by the app.
## **What should UAE NRIs do before making a UPI payment?**
Continue using UPI normally for personal transfers and merchant purchases, but check the final amount before entering your UPI PIN.
If an Indian merchant tries to add a separate **“UPI fee” or “MDR charge”** to your bill because the payment exceeds ₹2,000, the new framework does not intend that merchant-side MDR to be passed directly to you.
Also make sure your UPI application, Indian bank details and registered UAE mobile number remain updated.
For UPI transactions made in the UAE, pay particular attention to exchange rates and international processing costs.
## **Quick summary for UAE NRIs**
From **October 15, 2026**, eligible merchant UPI transactions above ₹2,000 will attract a **0.4% MDR**, capped at ₹300.
**The merchant pays it—not the customer.**
Person-to-person transfers remain free.
Merchant payments of ₹2,000 or less remain outside the new MDR.
Qualifying small merchants remain exempt.
Fuel, railway, telecom, insurance and certain utility payments above ₹2,000 receive a concessional fee structure.
Using UPI through eligible NRE/NRO accounts with supported +971 UAE mobile numbers does not create an additional customer MDR simply because the payer is an NRI.
## **Why this matters**
For UAE NRIs, the headline **“UPI will no longer be free”** can be misleading.
The October 15 change does not mean every Indian living in the UAE will suddenly start paying fees when scanning a UPI QR code or sending money home.
The biggest change is on the **merchant side of the payment system**, particularly for larger commercial UPI transactions.
For consumers, personal transfers remain free and eligible merchant purchases should not carry a separate MDR charge at checkout.
## Related Reads - [Sharjah Unveils New Al Taawun Square Design as Major Traffic Upgrade Nears November Opening](/post/sharjah-unveils-new-al-taawun-square-design-major) - [UAE Gold Rate Today: How Dubai Gold Prices Are Calculated and Why They Change Daily](/post/uae-gold-rate-today-dubai-gold-prices-calculated) - [What Business Would You Start With AED 400K in the UAE? 8 Ideas Worth Exploring](/post/business-would-start-aed-400k-uae-8-ideas) - [4 Dubai Neighbourhoods Where Rents Are Finally Falling in 2026](/post/4-dubai-neighbourhoods-where-rents-finally-falling-2026) - [More stories like this](/category/news)