New Delhi, September 15: The Government has announced a major change in the Unified Payments Interface (UPI) payment system, introducing a 0.4% Merchant Discount Rate (MDR) on certain merchant transactions above ₹2,000. The new fee structure is scheduled to come into effect from October 15, 2026, with the maximum charge capped at ₹300 per transaction.
The new charges will apply to Person-to-Merchant (P2M) transactions above ₹2,000, while Person-to-Person (P2P) UPI transfers will continue to remain free. Merchant payments of up to ₹2,000 will also remain outside the new MDR structure.
Under the revised system, a UPI merchant payment of ₹3,000 would attract an MDR of ₹12, while a payment of ₹50,000 would attract ₹200. For transactions of ₹75,000 or more, the applicable MDR would be capped at ₹300.
Special categories, including railway, telecom, insurance, fuel and agricultural input payments, will have a flat MDR of ₹5 on transactions above ₹2,000. Certain financial-sector transactions, including mutual funds, securities and stockbroking payments, will attract a lower rate of 0.02%, subject to the ₹300 cap.
The Government has maintained that the vast majority of small-value UPI merchant transactions will remain unaffected. It has also directed stakeholders to ensure transparency and prevent the additional cost from being directly passed on to consumers as a separate payment charge.
The move marks a significant change in the UPI merchant-payment framework after several years of zero-MDR transactions.
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