Good News for UPI Users! Indian Railways to Absorb New ₹5 Fee on High-Value Ticket Bookings
Passengers booking railway tickets via UPI can breathe a sigh of relief. Despite upcoming changes to digital payment regulations, the cost of your journey will not be impacted by new transaction fees. While new Merchant Discount Rate (MDR) rules are set to introduce a fee for high-value UPI transactions, Indian Railways has stepped up to ensure the passenger is not the one paying.
The New UPI MDR Rules Explained
Starting from October 15, 2026, the National Payments Corporation of India (NPCI) will implement new regulations regarding how merchants are charged for UPI transactions. Under these rules, a flat fee will be introduced for specific categories of essential services when the transaction amount exceeds ₹2,000.
While most general merchants will be required to pay a 0.4% fee for transactions over this threshold, railway ticketing has been placed into a unique, special category. Instead of a percentage-based charge, railway payments above ₹2,000 will incur a fixed ₹5 fee.
What remains free of charge?
- All UPI transactions of ₹2,000 or less will continue to be free.
- All person-to-person (P2P) transfers remain entirely free of any MDR.
Will Your Ticket Price Increase?
The most important question for travelers is whether this fee will be added to their IRCTC booking total. The answer is a definitive no. The ₹5 charge is classified as a merchant-side processing fee, meaning it is the responsibility of the service provider, not the customer.
"The ₹5 charge is a merchant-side processing fee and will not be passed on to passengers," clarified Saurabh Jain, Senior Divisional Commercial Manager for the Kota Division.
Consequently, individuals booking through IRCTC will see no increase in their final ticket prices, as the burden of this cost will be borne by Indian Railways or IRCTC itself.
Strict Government Oversight
To protect consumers from unexpected costs, the Union Finance Ministry has issued clear directives to banks. They have been instructed to ensure that merchants do not attempt to offload these MDR costs onto the end customers. Furthermore, UPI application providers are strictly prohibited from imposing any additional platform fees or hidden charges related to these transactions.
Railway ticketing is not alone in this structure; it joins other essential sectors such as telecom, insurance, fuel, and agricultural inputs, all of which will follow this specific MDR model to ensure that the financial weight of digital transaction fees stays with the merchant rather than the public.