RBI
RBI Governor: MDR on UPI unlikely to reduce transaction volumes
7 October 2026 · www.business-standard.com
RBI Governor Sanjay Malhotra said the 0.4% MDR on person-to-merchant UPI transactions, effective October 15, is unlikely to dent volumes. UPI recorded 802 million average daily transactions in September, with certain categories facing a flat ₹5 fee above ₹2,000.
Points to Remember
- % MDR applies to UPI P2M transactions from October 15, capped at ₹300 per transaction.
- Fuel, education and bill payments attract a flat ₹5 fee for transactions above ₹2,000.
- P2P transfers, merchant payments below ₹2,000 and P2PM payments remain free.
- MDR is borne by merchants, not customers.
- UPI recorded 802 million average daily transactions in September; value averaged ₹97,913 crore.
Why it matters
This signals that UPI merchant payments will now carry a cost for merchants, while small-ticket and peer-to-peer transfers stay free, and customer transaction behavior is expected to remain largely unchanged.
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