India confirms UPI remains free for UAE NRIs as new merchant fees loom

UAE-based Non-Resident Indians (NRIs) will continue to use the Unified Payments Interface (UPI) without transaction fees even after India introduces a new Merchant Discount Rate (MDR) on Wednesday, 23 September. The Indian government confirmed that the 0.4 per cent charge, which takes effect on 15 October 2026, applies exclusively to businesses and cannot be passed on to consumers. Merchants to bear processing costs Under the new framework, a 0.4 per cent MDR will be levied on selected person-to-merchant (P2M) payments exceeding Rs2,000 (Dh88). The charge is capped at Rs300 for high-value transactions reaching Rs75,000. India’s Finance Ministry has issued a directive prohibiting merchants and UPI app providers from imposing platform fees or passing these costs to buyers at checkout. Union Finance Minister Nirmala Sitharaman stated that the MDR is a fee between payment service operators designed to improve digital infrastructure. "The burden does not fall on the customer," Sitharaman said, clarifying that transactions of exactly Rs2,000 or less remain free for all parties. Exemptions for personal transfers For the thousands of NRIs in the UAE who use UPI for family remittances or bill payments, person-to-person (P2P) transfers remain entirely free. This exemption covers sending money to relatives, splitting bills with friends, and moving funds between a user’s own linked bank accounts, regardless of the transaction amount. Low-margin sectors including fuel, railways, and…