New UPI Charges From October 15: Will Crypto Buyers in India Pay 0.4% More?

Will Indian crypto exchanges start charging users for UPI deposits from October 15? Not as a UPI MDR charge.

India’s new Unified Payments Interface (UPI) pricing framework keeps UPI free for customers. From October 15, 2026, a 0.4% Merchant Discount Rate (MDR) will apply to eligible person-to-merchant, or P2M, UPI payments above ₹2,000. P2M means a payment from an individual to a business account, while person-to-person, or P2P, means a payment between two individuals. 

The cost sits on the merchant side of the payment system, not with the person making the payment. For transactions of ₹75,000 or more, the MDR is capped at ₹300.

That distinction matters for crypto buyers. If an Indian crypto exchange accepts an INR deposit through a UPI flow classified as a direct account-to-merchant-account payment, the exchange or its payment-side ecosystem could incur the new MDR. But if a user transfers money directly to another individual in a genuine person-to-person UPI transaction, the new merchant MDR does not apply.

The new rules therefore do not mean every crypto user will suddenly pay 0.4% more to deposit rupees. What they do create is a new payment-processing cost for some exchange funding flows—and a reason for users to watch how individual platforms respond.

Quick Answer: What Changes for Crypto Buyers?

Situation	From October 15, 2026	Who bears the UPI MDR?
UPI payment to another individual	No MDR	Nobody
Merchant UPI payment of ₹2,000 or less	No MDR	Nobody
Standard merchant UPI payment above ₹2,000	0.4%, capped at ₹300	Merchant/payment ecosystem
Direct exchange UPI deposit classified as P2M	Could fall under standard MDR	Exchange/payment side, not customer
Genuine P2P payment to another person	No merchant MDR	Nobody
IMPS, NEFT or RTGS deposit	Not covered by this UPI MDR	Separate bank/exchange rules may apply
UPI AutoPay/recurring mandate	Outside the prescribed MDR framework	Existing mandate rules apply

The Finance Ministry has said customers should not be made to bear the MDR and that UPI application providers cannot impose platform or hidden UPI payment charges on users. The Ministry of Finance and Press Information Bureau (PIB) restated that position on 15 September 2026.

What Exactly Is Changing With UPI on October 15?

Until now, the central policy framework broadly protected UPI merchant transactions from MDR. That is changing for higher-value merchant payments.

A September 14 government notification specified UPI transactions up to ₹2,000 as a protected no-charge mode. That notification used the Payment and Settlement Systems Act, 2007 framework to keep UPI payments up to ₹2,000 free of MDR. A day later, the government detailed the revised framework for larger merchant payments, effective October 15.

Under the new structure, standard P2M transactions above ₹2,000 attract an MDR of 0.4%. The MDR reaches its ₹300 cap at ₹75,000. That means a merchant receiving ₹1 lakh through an eligible P2M UPI transaction would still face a maximum MDR of ₹300 rather than ₹400. Person-to-person transactions remain free regardless of their value.

The government estimates that about 96% of merchant UPI transactions will remain unaffected because they are either low-value payments or fall within protected small-merchant categories.

Small merchants receiving up to ₹1 lakh a month through UPI QR codes under the P2PM category stay on zero MDR even if a single receipt is above ₹2,000. Essential and thin-margin sectors such as railways, telecom, insurance, fuel and agricultural inputs pay a flat ₹5 MDR above ₹2,000, while payments relating to mutual funds, securities, stockbrokers and dealers attract 0.02% MDR, capped at ₹300. Virtual digital assets and crypto exchanges are not named in that capital-market list.

What Is MDR, and Why Aren’t Customers Supposed to Pay It?

MDR, or Merchant Discount Rate, is the payment-processing charge associated with accepting a digital merchant payment. It is not a new tax on UPI users.

The money is distributed among participants in the payments ecosystem, such as acquiring and issuing banks, payment service providers, and UPI application providers. The acquiring bank is the merchant’s bank, the issuing bank is the customer’s bank, and UPI application providers include apps such as PhonePe, Google Pay, and Paytm, while the National Payments Corporation of India, or NPCI, operates UPI.

The Finance Ministry explicitly describes MDR as a merchant-payment ecosystem charge rather than a government levy.

That creates an important distinction: A merchant may have a new cost even though the customer still sees the same payment amount.

For example, if a customer pays ₹10,000 through an eligible P2M UPI transaction, the MDR would be ₹40. The customer should still pay ₹10,000. The ₹40 is handled within the merchant payment ecosystem.

So What Does This Mean for Crypto Exchange Deposits?

This is where the answer becomes more nuanced.

A crypto exchange deposit can reach the platform through different payment structures. The name shown inside the exchange app—“UPI deposit,” “add INR” or “instant deposit”—does not by itself determine the MDR treatment.

What matters is how the transaction is classified and settled within UPI.

Direct UPI Deposit to an Exchange

Suppose a user opens an Indian exchange, selects “Add INR,” chooses UPI, and pays directly into a merchant or payment-aggregator flow.

If that transaction is classified as a standard P2M UPI payment, an amount above ₹2,000 would ordinarily fall under the new 0.4% MDR framework.

Crypto exchanges are not specifically named in the government’s concessional capital-market category. The Finance Ministry separately provides a lower 0.02% MDR for payments relating to mutual funds, securities, stockbrokers and dealers. Its published framework does not list virtual digital assets or crypto exchanges in that category. Virtual digital asset, or VDA, is the Indian tax-law term for crypto and similar digital assets.

It would therefore be premature to assume crypto exchange deposits qualify for the capital-markets rate unless NPCI, an acquiring bank or another competent payment participant provides a specific classification. For users, however, the immediate point remains the same: the new MDR is not supposed to appear as a 0.4% UPI surcharge added to the deposit amount.

Will CoinDCX, CoinSwitch, Mudrex or Other Exchanges Start Charging Deposit Fees?

There is no basis yet to say that they will. As of September 16, the public exchange pages reviewed by The Crypto Times do not show a broad new October 15 customer UPI charge.

CoinDCX’s support material currently says it does not charge fees for INR deposits. Mudrex lists INR deposits as free and specifically says UPI and IMPS funding carry zero Mudrex fees, subject to any separately disclosed payment-partner charge. CoinSwitch also supports UPI funding and has public material describing INR deposits as free.

ZebPay supports a dedicated UPI deposit flow and tells users that the confirmation screen will display applicable fees and Goods and Service Tax (GST) before payment, while its general fiat pricing page lists zero fees for certain other fiat deposit methods.

Those policies can change. The most defensible conclusion today is therefore not “crypto exchanges will charge 0.4%” or “nothing will change.”

It is: Some exchanges may begin absorbing a new merchant-side payment cost on eligible UPI deposits. Users should watch the actual deposit screen and fee schedule as October 15 approaches.

Also Read: Indian Crypto Exchanges to Absorb 0.4% UPI Charge From October 15, Users Pay Nothing Extra

How Much Could a Direct UPI Deposit Cost the Exchange?

Assuming a deposit is classified as a normal P2M transaction subject to the 0.4% MDR:

UPI Deposit	Merchant-Side MDR	Expected UPI MDR Charged to User
₹1,500	₹0	₹0
₹2,000	₹0	₹0
₹3,000	₹12	₹0
₹10,000	₹40	₹0
₹25,000	₹100	₹0
₹50,000	₹200	₹0
₹75,000	₹300	₹0
₹1,00,000	₹300	₹0

These figures illustrate the payment-processing cost, not a new crypto tax or mandatory customer fee.

What About Crypto Deposits of ₹2,000 or Less?

For standard merchant UPI payments, the new MDR only begins above ₹2,000. That means an eligible P2M payment of exactly ₹2,000 remains within the zero-MDR framework.

However, users should not deliberately split large transfers into repeated smaller deposits merely to avoid merchant economics. Exchanges, banks, and payment providers can maintain their own transaction limits, fraud monitoring, and anti-abuse controls.

The ₹2,000 threshold determines MDR treatment. It does not override an exchange’s deposit rules or a bank’s risk controls.

What Happens When You Buy Crypto Through P2P?

P2P requires another distinction. UPI person-to-person transactions remain outside the new merchant MDR, regardless of amount.

So if a buyer genuinely sends money from their bank account to another individual through a P2P UPI transfer, the new P2M MDR does not apply merely because the payment is connected to a crypto trade.

But users should not assume that every transaction offered through a platform labelled “P2P” will necessarily have the same payment classification.

The relevant question is whether the UPI leg is actually processed as a person-to-person transaction or through a merchant account.

P2P crypto also carries separate considerations, including counterparty risk, payment disputes, pricing spreads, bank-account scrutiny, and platform-specific compliance requirements. A lack of MDR does not automatically make P2P the cheaper or safer way to buy crypto.

Can You Use IMPS or NEFT Instead?

Yes, where the exchange supports them. The new 0.4% framework applies to specified UPI merchant payments, not to IMPS, NEFT or RTGS transfers.

That makes bank transfer an important alternative for users making larger INR deposits.

CoinDCX, for example, provides bank-transfer funding through IMPS, NEFT or RTGS in its support material, while CoinSwitch also lists bank transfers alongside UPI.

But “outside UPI MDR” does not mean universally free. A bank, payment provider or exchange may have separate limits, processing rules or charges associated with another payment rail. Users should compare the final amount credited rather than assuming that every non-UPI method costs zero.

What About UPI AutoPay and Crypto SIPs?

The revised framework also matters for recurring payments. NPCI’s FAQ, as reported following the announcement, says UPI mandates and AutoPay transactions are outside the prescribed MDR framework. That includes recurring payment structures rather than ordinary one-time P2M transactions.

NPCI set that out in its 15 September 2026 UPI MDR FAQ. A Systematic Investment Plan (SIP), is a scheduled investment, and a UPI Mandate or AutoPay is a standing instruction that lets an approved merchant pull a recurring amount.

For crypto users, that does not automatically mean every exchange “SIP” is exempt.

Some crypto SIP products may simply schedule purchases against an existing INR wallet balance. Others may use recurring bank mandates or different payment infrastructure. The treatment depends on the actual payment rail used to fund the recurring purchase.

What Does Not Change for Indian Crypto Investors?

The October UPI change is a payments rule, not a revision of India’s crypto tax framework. It does not remove or replace the tax and platform costs already associated with crypto transactions.

Also Read: P2P Crypto TDS in India Explained: Who Pays 1%, How to File, and What to Avoid

Most importantly:

• The VDA tax regime remains separate. Income from the transfer of virtual digital assets remains subject to the applicable 30% special tax framework, along with applicable surcharge and cess.
• The 1% VDA Tax Deducted at Source (TDS) regime is separate from UPI MDR. The Income Tax Department says TDS rates were retained when the Income-tax Act, 2025 took effect on April 1, 2026, and consolidated non-salary TDS provisions under Section 393. The earlier VDA provision prescribed 1% withholding on applicable consideration. TDS and VDA consideration still carry 1% TDS under Section 393 of the Income-tax Act, 2025.
• Exchange trading fees do not disappear. Maker/taker fees, spreads, and other platform charges are determined independently by each exchange.
• Withdrawal fees are separate. An exchange can have different rules for withdrawing INR or crypto even when INR deposits are free.
• Network fees are unrelated. Blockchain gas or network fees apply to on-chain crypto transfers, not to the UPI rail used to deposit rupees.

In other words, a user should not confuse a ₹40 merchant-side MDR on a ₹10,000 UPI payment with 1% VDA TDS, a trading fee, or a tax on crypto profits. They are entirely different charges arising at different stages of a transaction.

Could Exchanges Recover the Cost in Other Ways?

Potentially, but that should not be confused with directly passing MDR to the customer. An exchange facing higher payment-processing costs could choose to absorb them as a cost of doing business.

It could also review unrelated commercial policies such as trading fees, promotional incentives, or the payment methods it supports. Any such change would be an exchange-level commercial decision rather than a rule requiring crypto users to pay 0.4%.

That is why users should focus on the final fee disclosure shown by the exchange rather than headlines suggesting that “UPI now costs 0.4%.” The official framework says UPI remains free to consumers.

What Should Crypto Buyers Check Before October 15?

Before making a large INR deposit, users should check four things: whether the transfer is UPI or bank transfer, whether the UPI transaction is being processed as P2P or P2M, what fee appears on the exchange’s final confirmation screen, and how much INR will actually be credited.

A change in the exchange’s trading fee is not the same as a UPI charge. Neither is a payment-gateway charge, withdrawal fee, or spread. Keeping those categories separate will become more important once the MDR framework goes live.

Bottom Line

UPI is not becoming 0.4% more expensive for Indian crypto buyers. From October 15, the change happens primarily behind the checkout screen: eligible merchants accepting UPI payments above ₹2,000 will begin paying a 0.4% MDR, capped at ₹300.

For crypto exchanges, that can matter when an INR deposit is processed as a standard P2M UPI payment. It does not apply in the same way to genuine person-to-person transfers, and it does not cover separate rails such as IMPS or NEFT.

The unanswered question is commercial, not regulatory: how will each crypto exchange respond to the new payment-processing cost? Until an exchange changes its published fee schedule, users should not assume a new UPI deposit fee is coming.

But from October 15 onward, checking the payment method and final fee screen before sending a large INR deposit will matter more than it does today.

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