UPI Payment Update: New ₹5 Fee for Railway Tickets Over ₹2,000—Will You Have to Pay?
Indian Railways is set to introduce a revised payment structure for digital transactions. Starting from October 15, 2026, a new Merchant Discount Rate (MDR) framework will come into effect for all ticket bookings processed through the Unified Payments Interface (UPI).
The Truth About the New ₹5 Charge
While a new fee structure is being introduced, travelers can breathe a sigh of relief. Although a flat MDR of ₹5 per transaction will be applied to railway ticket bookings exceeding ₹2,000, this cost is designed to support the digital payment infrastructure and will not be charged to the passenger.
The MDR is categorized as a merchant-side expense. This means the Indian Railways or IRCTC will absorb the entire cost, ensuring that the price you see for your ticket remains the same.
Saurabh Jain, Senior Divisional Commercial Manager for the Kota Division, has explicitly stated that passengers purchasing tickets valued over ₹2,000 via UPI will incur no additional costs.
What Stays Free for Passengers?
The new guidelines, issued by the National Payments Corporation of India (NPCI) and the Union Finance Ministry, ensure that small-value transactions remain unaffected. You will not face any MDR charges in the following scenarios:
- Low-Value Bookings: Any UPI transaction for railway tickets amounting to ₹2,000 or less is completely exempt.
- Personal Transfers: All Person-to-Person (P2P) UPI transfers will continue to be free of charge, regardless of the transaction amount.
Broader UPI Changes for Merchants
The new framework also outlines how UPI payments will work for general commerce outside of the railway sector. For Person-to-Merchant (P2M) transactions exceeding ₹2,000, the following rules apply:
- A 0.4% MDR will be levied on such transactions.
- For high-value transactions of ₹75,000 and above, the fee is capped at ₹300.
- Small Merchant Exemption: To encourage digital efficiency, small merchants who process up to ₹1 lakh per month through UPI QR codes will remain exempt from these charges.