3 hrs ago
UPI Merchant Payments Above ₹2,000 Face New MDR
Starting October 15, 2026, some shops will have to pay a small fee when customers pay them more than ₹2,000 through UPI.
The fee is called MDR.
It will normally be 0.4% of the payment.
For payments of ₹75,000 or more, the fee cannot be higher than ₹300.
Customers will not have to pay this fee.
Sending money to another person will also remain free.
Small merchants receiving up to ₹1 lakh each month through eligible QR payments will stay exempt.
NPCI says the money will help maintain and improve the UPI system.
From October 15, 2026, qualifying UPI person-to-merchant payments above ₹2,000 will carry a 0.4% merchant discount rate.
The MDR will be paid by merchants, while consumers will continue using UPI without transaction charges.
The fee will be capped at ₹300 for transactions worth ₹75,000 or more.
Railways, telecom, insurance, fuel and certain public utilities will face a flat ₹5 MDR above ₹2,000.
Person-to-person transfers, payments up to ₹2,000 and eligible small P2PM merchants will remain exempt.
- Who
- The National Payments Corporation of India announced the framework; qualifying merchants will pay the MDR.
- What
- A 0.4% MDR will apply to specified UPI person-to-merchant payments above ₹2,000, subject to exemptions, special rates and a ₹300 cap.
- Where
- The framework applies to eligible UPI merchant transactions in India.
- When
- The revised framework takes effect on October 15, 2026.
- Why
- NPCI says the revenue will support UPI infrastructure, resilience, cybersecurity, innovation, customer service and wider merchant acceptance.
Key facts
- Standard MDR
- 0.4% on qualifying person-to-merchant UPI payments above ₹2,000.
- MDR cap
- ₹300 per transaction for payments of ₹75,000 or more.
- Who pays
- The merchant receiving the qualifying payment pays the MDR through the merchant payment ecosystem.
- Consumer charges
- Consumers continue to use UPI without transaction charges.
- Exempt transactions
- Person-to-person transfers and UPI merchant payments up to ₹2,000 remain outside the MDR framework.
- Small-merchant exemption
- Eligible P2PM merchants receiving up to ₹1 lakh per month directly through UPI QR payments continue to receive zero MDR.
- Special categories
- Railways, telecom, insurance, fuel and certain public utilities face a flat ₹5 MDR above ₹2,000.
Quotes
National Payments Corporation of India (NPCI)
India’s retail payments network operator that announced the revised MDR framework.
“This flat-rate model prevents cost escalations in critical public services, utility bill collection, and thin-margin sectors like fuel retail. It ensures that essential consumer services remain low-cost and digitally efficient.”
indianexpress.com
“No bank or system provider shall impose, whether directly or indirectly, any charge upon a person making or receiving a payment by using the electronic modes of payment specified in paragraph above”
indianexpress.com
Sources
UPI payments above Rs 2,000 to attract 0.4% MDR from Oct 15: Who pays and who is exempt
UPI payments over Rs 2,000 to merchants will attract 0.4% fee
UPI MDR of 0.4% on transactions above ₹2,000 from October 15: What you need to know
UPI Transactions Above ₹2,000 To Attract 0.4% MDR
UPI Payments Above Rs 2,000 Face 0.4% MDR, Know- Who Will Actually Pay?
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