UPI MDR to Return for High-Value Merchant Payments from October 15

Desk,Odishabarta

Merchants to Pay 0.4% on Transactions Above Rs.2,000; Consumers Exempt

NEW DELHI, Sept. 16: The government has announced the reintroduction of the Merchant Discount Rate (MDR) on select Unified Payments Interface (UPI) transactions, with merchants required to pay a fee on high-value person-to-merchant (P2M) payments while consumers will continue to use UPI without any additional charge.

Under the new framework, effective October 15, 2026, merchants will be charged an MDR of 0.4% on P2M UPI transactions above  Rs.2,000. The MDR will be capped at  Rs.300 for transactions of  Rs.75,000 and above.

The government has clarified that the additional cost will not be passed on to consumers. Merchants will pay the MDR to acquiring banks, while UPI application providers will not be permitted to impose platform fees or other charges on users for such transactions.

Sector-Specific Charges

Certain sectors will have a separate MDR structure. Transactions above  Rs.2,000 involving railways, telecom, insurance and fuel will attract a flat charge of  Rs.5 per transaction.

For capital-market transactions, including mutual funds, securities and stockbroker payments, the MDR will be 0.02%, subject to a maximum cap of  Rs.00.

P2P Transfers to Remain Free

Person-to-person (P2P) UPI transfers will continue to remain free of charge.

Small merchants receiving up to  Rs.1 lakh per month through UPI QR codes under the Person-to-Person Merchant (P2PM) framework will also continue to remain exempt from MDR.

The government said the move is intended to support the long-term sustainability of the UPI ecosystem, which recorded 2,451 crore transactions worth Rs.29.9 lakh crore in August 2026 alone.

The revised framework is expected to affect merchants handling higher-value digital payments, while ordinary consumers will continue to make UPI payments without directly paying MDR.

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