Business & Economy
RBI And Finance Ministry Press Banks To Keep ATMs Stocked As UPI Fee Change Nears
Banks are being pushed to prevent cash shortages if withdrawals rise
Banks are being pushed to prevent cash shortages if withdrawals rise
pricing is shifting from an all-free model into a narrower charge on larger , and that is putting cash usage back into focus. The RBI and want banks ready with well-stocked ATMs because even a limited fee change could nudge some consumers toward withdrawals, raising pressure on just as digital payments face a test at the cash-digital boundary.
The revised UPI merchant pricing framework is scheduled to take effect on October 15, 2026. From that date, larger person-to-merchant payments above ₹2,000 can attract MDR, while person-to-person UPI and small-value payments remain free. The change turns payment pricing into a live test of whether users shift some spending back toward cash or other channels.
The new UPI merchant fee framework is set to take effect on October 15, with reporting indicating the change could affect payment behavior and cash usage.
Trade and business coverage said merchants would be the parties paying the new MDR on eligible UPI transactions above ₹2,000. Analysts and industry reports warned that some merchants could try to , while others might prefer cash or cheaper payment methods for larger bills. That created the first clear possibility of away from digital payments in higher-value transactions.
Public explanations after the notification focused on calming fears that all UPI would become chargeable. The clarification said the new pricing applied to larger merchant transactions, not to transfers or small daily payments. That messaging was important because consumer behavior at the cash-digital boundary depends on whether people think routine payments are still free.
Following the government notification, issued a revised framework that set October 15, 2026 as the start date for new merchant UPI pricing. Coverage said a 0.4 percent MDR would apply to UPI payments above ₹2,000, with a cap on larger transactions, while everyday consumer transfers stayed free. Officials also stressed that person-to-person UPI payments and small merchant payments under the threshold would remain exempt.
The Finance Ministry notified that transactions up to ₹2,000, and payments, cannot be charged directly or indirectly by banks or payment system providers. The move marked a formal shift in the policy framework, because it preserved zero-cost digital payments for small-value users while creating room for charges on larger merchant transactions. Reported coverage said the notification itself did not set a new fee, but it changed the legal basis for later rules.