Consumer dept preps guardrails as UPI fee set to kick in

The department, the custodian of consumer rights, will support the finance ministry in resolving complaints and grievances received through the consumer helpline.

As India's new fee on UPI merchant transactions kicks in on Oct 15, the government is preparing to ensure the cost does not unfairly land on consumers. The Department of Consumer Affairs is strengthening the National Consumer Helpline (NCH) to handle complaints under the new merchant discount rate (MDR) framework and clarify which UPI payments must remain free, two government officials said.

The department, the custodian of consumer rights, will support the finance ministry in resolving complaints and grievances received through the consumer helpline, they said. The department has strengthened the helpline to handle such complaints, having already managed a similar flow post rationalization of goods and services tax rates last September.

“Since the NCH serves as a pre-litigation consumer grievance redressal mechanism, the department is putting in place a detailed set of dos and don’ts to guide consumers on the new framework," said the first of the two people cited above. "It is also training call-centre executives to respond to consumer queries and grievances with accurate and relevant information.”

“As clearly stated by the finance ministry, person-to-person (P2P) UPI transactions will remain completely free, while a 0.4% MDR will apply only to specified person-to-merchant (P2M) transactions of above ₹2,000. Transactions of up to ₹2,000 will also remain free,” said the second person.

“If consumers register complaints with the NCH against merchants for imposing charges in violation of these provisions, the complaints will be examined under the Consumer Protection Act and necessary action will be taken,” the person said.

To be sure, for P2M UPI transactions of ₹75,000 and above, the MDR is capped at ₹300 per transaction. The standard MDR is 0.4%, but the cap means the charge does not keep increasing beyond ₹300.

The helpline is a channel for consumers to seek clarifications and redressal. After the GST rationalization move, it got 3,981 queries and grievances in about two weeks of implementation. Of these, 69% were grievances, while 31% were queries.

Queries will be answered immediately, while for grievances, the consumer affairs department will examine whether they can be addressed under the Consumer Protection Act. Complaints that fall under the purview of the finance ministry will be forwarded to the concerned department for appropriate action, the officials said.

Traders seek relief for small businesses

India's largest trade association welcomed the new MDR framework, and denied that merchants had indicated they would stop accepting payments in UPI. “None of the traders have said they will stop accepting payments above the ₹2,000 limit. All merchants will continue to accept UPI payments. At the same time, we are requesting the government to provide some exemption to small traders,” said B.C. Bhartia, national president of the Confederation of All India Traders (CAIT), which represents more than 8 crore traders and 40,000 trade associations.

“Traders are very much in support of this and are ready to cooperate with it fully. UPI has been good for traders, as it has eased cash-flow management and streamlined the payment process,” he said. “The only concern is that the additional charge could put pressure on small traders, particularly those operating on thin margins.”

UPI has become the dominant digital-payment platform in India, with 24,509 million transactions worth ₹29.82 lakh crore made in August 2026 alone, per National Payments Corporation of India (NPCI) data. In FY26, it processed 24,162 crore transactions worth ₹314.23 lakh crore.

The consumer department's helpline, a pre-litigation grievance-redressal platform, has seen a sharp rise in the number of complaints. It got 17.71 lakh grievances in 2025, with the average monthly number of complaints rising to 1.70 lakh from 37,062 in 2017, government data shows.

Queries sent to the spokespersons of the consumer affairs department, the finance ministry and the department of financial services secretary remained unanswered until press time.

About the Author

Dhirendra Kumar is a seasoned policy reporter with about 20 years of experience in deep, on-ground reporting across key economic and governance sectors. His work spans finance, public expenditure, disinvestment, public sector enterprises, textiles, trade, consumer affairs, and agriculture, with a strong focus on uncovering structural policy shifts and their real-world impact.<br><br>Kumar has been awarded the Chaudhary Charan Singh Award for Excellence in Journalism in Agricultural Research and Development, recognising his contribution to reporting on critical issues in the farm sector. He has also been a recipient of a fellowship in international trade from the National Press Foundation, which has further strengthened his coverage of global trade dynamics and their implications for India.<br><br>Kumar is known for breaking complex policy developments into clear, accessible stories. His reporting focuses on uncovering under-reported trends, explaining policy shifts, and helping readers stay informed about developments that shape India’s economic landscape.