UPI MDR from October 15: 0.4% Fee on Select Merchant Payments Above ₹2,000

NEW DELHI, September 16, 2026: A new Merchant Discount Rate (MDR) framework for select UPI person-to-merchant payments will take effect from October 15, 2026.

What changes under the new UPI MDR framework?

Most UPI person-to-merchant transactions above ₹2,000 will attract an MDR of 0.4%. For transactions of ₹75,000 and above, the MDR will be capped at ₹300 per transaction.

What remains free?

Person-to-person UPI payments will remain free, irrespective of transaction value. Payments up to ₹2,000 will not attract MDR. Small merchants receiving up to ₹1 lakh per month through UPI QR payments under the small-merchant classification will also remain exempt.

The government has said consumers should not be charged the MDR. Banks have been advised to ensure that merchants do not pass the fee on to customers.

Special sector rates

Payments to sectors including railways, telecom, insurance, fuel and agriculture inputs may attract a flat concessional MDR of ₹5 for transactions above ₹2,000. Payments involving mutual funds, securities, stock brokers and dealers are reported at a 0.02% MDR, capped at ₹300.

Why is MDR being introduced?

Authorities and the payments ecosystem say the framework is intended to support investment in UPI infrastructure, cybersecurity, fraud prevention, innovation and customer service. The Finance Ministry FAQ says more than 95% of UPI person-to-merchant transaction volume is at or below ₹2,000.

Important: The MDR is a merchant-side processing fee. Consumers should continue to be able to use UPI without a payment charge under the announced framework.

Sources

• Ministry of Finance: FAQs on MDR on Select UPI P2M Transactions
• Reuters: India payments authority sets 0.4% fee on select UPI merchant payments
• The Hindu: Merchants to be charged 0.4% for UPI transactions over ₹2,000