Archive · 21 Sep 2026
NPCI Sets UPI MDR Below Traditional Card Charges
MDR is a fee that a merchant pays when accepting some digital payments.
NPCI says certain direct UPI payments to merchants will have a 0.4% fee if they are above ₹2,000.
Payments below ₹2,000 will not have this fee.
The fee cannot exceed ₹300 for payments of ₹75,000 or more.
Payments between people will remain free.
For example, a ₹3,000 purchase creates a ₹12 fee, while a ₹50,000 purchase creates a ₹200 fee.
Traditional credit cards usually charge merchants more, at about 1.5% to 2.5%.
Debit card charges can reach 0.90%.
UPI payments made using credit cards or credit lines follow different rules.
A 0.4% merchant discount rate applies to direct person-to-merchant UPI payments above ₹2,000 from 15 October.
UPI payments below ₹2,000 incur no MDR, while transactions of ₹75,000 or more are capped at ₹300.
Person-to-person UPI transfers remain completely free regardless of the amount transferred.
Traditional credit card MDRs typically range from 1.5% to 2.5%, while debit card MDRs can reach 0.90%.
Credit-linked UPI payments, including RuPay Credit Cards and bank credit lines, follow separate credit-product rules.
- Who
- The National Payments Corporation of India, merchants, banks, payment application providers, and UPI users are involved.
- What
- NPCI announced an MDR framework for selected person-to-merchant UPI transactions.
- When
- The framework is scheduled to begin on 15 October; the announcement was made the previous week, with no year specified.
- Where
- It applies within the UPI payment ecosystem; no specific physical location is stated.
- Why
- The framework is intended to support the long-term sustainability and expansion of UPI while keeping costs lower for individuals and small merchants.
- UPI MDR rate
- 0.4% for direct person-to-merchant UPI payments above ₹2,000.
- No-MDR threshold
- Transactions under ₹2,000 incur no MDR.
- Maximum MDR
- ₹300 for transactions of ₹75,000 and above.
- Credit card comparison
- Standard credit card MDRs typically range from 1.5% to 2.5%.
- Debit card comparison
- Debit card MDRs are capped at up to 0.90%.
- Person-to-person UPI
- P2P UPI transfers remain free regardless of the amount.
- Example calculation
- A ₹3,000 purchase produces a ₹12 MDR, while a ₹50,000 purchase produces a ₹200 MDR.
- Credit-linked UPI
- RuPay Credit Cards linked to UPI and pre-sanctioned bank credit lines follow standard credit-product rules.