UPI: New Merchant Charges From October 15
The Unified Payments Interface (UPI) continues to be a free and convenient service for the vast majority of consumer transactions. Person-to-person (P2P) transfers remain entirely free, regardless of the amount. However, a significant change is coming
this month for certain merchant payments. Starting October 15, 2026, a Merchant Discount Rate (MDR) of 0.4% will be applied to specified person-to-merchant (P2M) transactions that are above ₹2,000. It is crucial for consumers to understand that this charge is to be borne by the merchant, not the customer. You should only pay the listed price of goods and services, and any attempt by a merchant to add a 'UPI surcharge' is a violation. This new framework is designed to create a more sustainable financial infrastructure for the digital payments ecosystem. Everyday small-value transactions, which form the bulk of UPI payments, and all P2P transfers are unaffected, ensuring UPI remains the preferred payment mode for millions.
Fixed Deposits: Rate Transparency and Outlook
For Fixed Deposit (FD) investors, October brings new rules from the Reserve Bank of India (RBI) focused on transparency and consistency, which took effect from October 1, 2026. Banks are now required to offer uniform interest rates for similar deposits across all their branches on any given day. Additionally, rates for bulk deposits (₹3 crore and above) must be published on their websites by 10 AM daily. While these new rules don't force banks to increase or decrease rates, they empower consumers with clearer and more consistent information. As for the interest rates themselves, the market is in a holding pattern. The RBI's Monetary Policy Committee (MPC) is meeting between October 5-7 to decide on the repo rate, which influences FD returns. With inflationary pressures, some economists expect a potential rate hike, which could eventually lead to higher FD rates. Currently, rates vary widely, with small finance banks offering higher returns, some reaching up to 8.50% for senior citizens, while larger public and private sector banks offer more modest rates.
PPF: Interest Rate Unchanged for This Quarter
The government has announced the interest rates for small savings schemes for the third quarter of the financial year 2026-27, which runs from October 1 to December 31, 2026. For investors in the Public Provident Fund (PPF), the interest rate remains unchanged at 7.1%. This marks another quarter where the rate for this popular tax-saving instrument has been held steady. PPF continues to be a compelling long-term investment due to its Exempt-Exempt-Exempt (EEE) status, where the investment, interest, and maturity amount are all tax-free under the old tax regime. To maximize returns, investors should remember the '5th of the month' rule: interest for any given month is calculated on the lowest balance between the 5th and the last day. Therefore, it is always advisable to deposit your contributions, whether monthly or a lump sum, on or before the 5th of the month to ensure you earn interest for that entire month. The minimum annual contribution to keep the account active is ₹500, with the maximum being ₹1.5 lakh.
