UPI Payments Above Rs 2,000 to Attract 0.4% MDR from October 15

UPI transactions above Rs 2,000 to attract 0.4% MDR, capped at Rs 300

Mumbai, September 15

The revised UPI Merchant Discount Rate framework will come into effect from October 15, 2026, and will apply to select merchant transactions.

Under the new framework, an MDR of 0.4 per cent will apply to Person-to-Merchant (P2M) UPI transactions above Rs 2,000, with the MDR capped at Rs 300 per transaction.

For instance, a 0.4 per cent MDR on a Rs 2,000 transaction works out to Rs 8. However, the charge is part of the merchant-side MDR framework and the statement said consumers will continue to use UPI free of cost.

The revised framework keeps Person-to-Person (P2P) transactions and P2M transactions up to Rs 2,000 outside the scope of MDR.

NPCI said small merchants operating under the Person-to-Person Merchant (P2PM) framework will also continue to benefit from zero MDR.

This category covers small vendors receiving up to Rs 1 lakh per month through UPI QR payments directly into their bank accounts.

For specified merchant categories, including railways, telecom services, insurance and fuel, a flat MDR of Rs 5 per transaction will apply to UPI payments above Rs 2,000.

The framework also proposes a dedicated fund for small merchants to support digital payment infrastructure among existing merchants and in Tier 3 and smaller markets.

According to the statement, there will be no impact on small-value UPI transactions up to Rs 2,000 for all merchants, which account for more than 95 per cent of all UPI P2M transactions.

The revised framework aims to expand UPI acceptance, encourage sustained usage and accelerate the inclusion of small businesses in India's digital payments ecosystem.

NPCI said the reasonable MDR charge on high-value transactions will be distributed among UPI ecosystem players, helping support UPI expansion to new users and merchants as well as investments in resilience, cybersecurity and innovation.

The statement added that the revised UPI MDR remains lower than charges associated with several other digital payment instruments, including credit cards, debit cards and wallets.

— ANI