New Delhi, September 15, 2026: The National Payments Corporation of India (NPCI) has announced a new Merchant Discount Rate (MDR) framework for certain UPI transactions, with the changes set to take effect from October 15, 2026.
Under the new rules, a 0.4% MDR will apply to eligible Person-to-Merchant (P2M) UPI transactions above ₹2,000. The charge will be capped at ₹300 per transaction for transactions of ₹75,000 and above.
However, customers will not be charged for making UPI payments. Person-to-Person (P2P) transactions will also continue to remain free. The government has said that the MDR is intended to support the long-term sustainability, infrastructure, cybersecurity and technological development of the UPI ecosystem.
Payments of ₹2,000 or below will continue without MDR, while certain essential sectors, including railways, telecom, insurance and fuel, will have a separate flat MDR structure. Small merchants meeting the prescribed criteria will also receive protection under the new framework.
The government has also clarified that the new system does not mean consumers will have to pay a 0.4% fee when they make a large UPI payment. The MDR is a charge within the merchant-side payment ecosystem.
The move marks a significant change in India’s UPI payment system, which has operated without merchant MDR for several years.
Note: This is an MDR on eligible merchant transactions, not a GST or direct tax on UPI users.
