Important Notification
UPI to charge 0.4% MDR on specified merchant payments above ₹2,000 from 15 Oct 2026
6 October 2026 · Mint
From 15 October 2026, UPI will apply a 0.4% Merchant Discount Rate on specified person-to-merchant transactions above ₹2,000, while consumers and person-to-person payments remain free of MDR. The charge is merchant-side and shared among banks, payment service providers and UPI app providers.
Points to Remember
- % MDR applies to specified P2M UPI transactions above ₹2,000; consumers pay no MDR and P2P transfers stay free.
- For transactions of ₹75,000 and above, MDR is capped at ₹300 (e.g., ₹1 lakh payment attracts ₹300, not ₹400).
- Flat ₹5 MDR applies above ₹2,000 in essential/thin-margin sectors such as railways, telecom, insurance, fuel and agricultural inputs.
- Mutual funds, securities, stockbrokers and dealers attract 0.02%, subject to a ₹300 cap.
- Merchant payments up to ₹2,000 and eligible small merchants remain zero-MDR; about 96% of P2M transactions are expected to be unaffected.
Why it matters
Merchants above the ₹2,000 threshold may see a small deduction on settlements from mid-October, so expect queries on revised credits and MDR slabs. Individuals can be reassured that their own UPI payments, including P2P transfers, remain free.
Part of the October 2026 digest.
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