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RBI Backs MDR on Large UPI Transactions for Sustainability
India’s central bank supports a new fee for some large UPI payments made to merchants.
The fee is 0.4% when the payment is more than ₹2,000.
It starts on October 15, 2026.
Regular people sending money to one another will not be charged.
Small merchant payments below ₹2,000 will also remain free for merchants.
Customers will not directly pay this fee.
Instead, it will be handled within the merchant payment system.
The RBI says this money can help keep UPI growing and reliable.
The Reserve Bank of India backed a 0.4% Merchant Discount Rate on UPI merchant transactions above ₹2,000.
The charge will apply from October 15, 2026, after nearly six years of fully free UPI payments.
Customers will not pay the MDR; it will be charged within the merchant payment ecosystem.
Person-to-person payments and UPI merchant transactions below ₹2,000 will remain free for users and merchants, respectively.
The RBI said MDR revenue can support investment in technology, infrastructure, acceptance networks and wider UPI adoption.
- Who
- The Reserve Bank of India, the Government of India and the National Payments Corporation of India are involved.
- What
- A 0.4% Merchant Discount Rate will apply to UPI merchant transactions exceeding ₹2,000, while users remain free from direct charges.
- Where
- The measure applies to India’s Unified Payments Interface ecosystem.
- When
- The policy was announced on September 15, 2026, and will apply from October 15, 2026.
- Why
- The RBI said the MDR will support long-term sustainability and investment in technology, infrastructure and payment acceptance networks.
Key facts
- MDR rate
- 0.4%
- Transaction threshold
- More than ₹2,000
- Effective date
- October 15, 2026
- Customer charges
- Customers will not be directly charged for UPI payments.
- Excluded transactions
- Person-to-person payments and merchant payments below ₹2,000 remain free.
- UPI launch date
- August 25, 2016
- Reported FY26 transaction value
- Approximately ₹314 lakh crore, compared with ₹0.07 lakh crore in FY17
- International acceptance
- UPI is accepted in 11 countries, according to the articles.
Quotes
Reserve Bank of India
India’s central bank, which commented on the proposed MDR.
“RBI remains committed to ensuring that UPI continues to be safe, seamless, affordable, and accessible, while supporting the long-term sustainability and growth of India's world-class digital payments ecosystem,”
telegraphindia.com
“It will help UPI in continuing to scale, innovate and serve consumers and businesses across the country.”
freepressjournal.in
telegraphindia.com
Sources
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