UPI payments above Rs 2,000 to attract 0.4% MDR from October 15
NPCI has imposed a 0.4% MDR on UPI merchant payments above Rs 2,000 from October 15, 2026. The charge will be paid by merchants, while low-value payments and consumer use remain free.
- Sep 15, 2026,
- Updated Sep 15, 2026, 10:11 PM IST
UPI merchant payments above Rs 2,000 will attract a 0.4% Merchant Discount Rate (MDR) from October 15, 2026, under a new framework announced by the National Payments Corporation of India (NPCI). However, consumers will continue to use UPI free of cost, with the charge to be borne by merchants.
The 0.4% charge will apply to Person-to-Merchant (P2M) transactions above Rs 2,000, while Person-to-Person (P2P) payments will remain free regardless of the transaction value. P2M transactions up to Rs 2,000 will also remain outside the scope of MDR.
The MDR will be capped at Rs 300 per transaction. This means a merchant payment of Rs 50,000 would attract an MDR of Rs 200, while a Rs 75,000 transaction would ordinarily attract Rs 300, reaching the stipulated cap. The Finance Ministry has advised banks to ensure that merchants do not pass the charge on to consumers.
For specific merchant categories, including railways, telecom services, insurance and fuel, a flat MDR of Rs 5 will be levied on UPI payments above Rs 2,000.
The revised framework is aimed at supporting the expansion and sustainability of the UPI ecosystem, including investments in resilience, cybersecurity and innovation. NPCI said low-value transactions and small-merchant payments would continue to remain largely free.