Archive · 16 Sep 2026
UPI Payments Above ₹2,000 Face New Merchant Fee
Starting October 15, 2026, some businesses will pay a small fee when customers pay them more than ₹2,000 through UPI.
This fee is called MDR, or Merchant Discount Rate.
The usual rate will be 0.4% of the payment, but it cannot be more than ₹300 for payments of ₹75,000 or more.
Customers will not have to pay a UPI transaction fee.
Sending money to another person will also remain free.
Payments up to ₹2,000 will remain free for merchants as well.
Small merchants that qualify under the P2PM rules will stay exempt, even when one payment is above ₹2,000.
Some sectors, such as railways, fuel and insurance, will have a flat ₹5 fee instead.
NPCI says the money will help support UPI infrastructure, security, innovation and wider acceptance.
From October 15, 2026, qualifying UPI person-to-merchant payments above ₹2,000 will attract a 0.4% merchant discount rate.
The MDR will be paid by merchants, capped at ₹300 for transactions of ₹75,000 or more; consumers will not be charged.
Person-to-person transfers and merchant payments up to ₹2,000 will remain free, covering more than 95% of UPI P2M transaction volumes.
Eligible small P2PM merchants receiving up to ₹1 lakh monthly through UPI QR codes will remain exempt, even if an individual payment exceeds ₹2,000.
Railways, telecom, insurance, fuel and specified utilities will face a flat ₹5 MDR, while eligible capital-market payments will incur 0.02%, capped at ₹300.
- Who
- The National Payments Corporation of India announced the framework; qualifying merchants will pay the MDR.
- What
- A revised MDR structure will charge 0.4% on specified UPI person-to-merchant payments above ₹2,000, with exemptions, special rates and a ₹300 cap.
- When
- The framework takes effect on October 15, 2026.
- Where
- It applies to eligible UPI merchant transactions in India.
- Why
- NPCI says the revenue will support UPI infrastructure, resilience, cybersecurity, innovation, customer service and expansion among small merchants.
NPCI’s funding rationale
Merchant cost concerns
Purpose of the MDR
NPCI’s funding rationale
NPCI says revenue will remain within the UPI ecosystem to fund infrastructure, operational resilience, cybersecurity, customer service, innovation and wider merchant acceptance.
Merchant cost concerns
Qualifying merchants will absorb a new processing cost on higher-value direct bank-account-to-merchant payments, although the charge is capped at ₹300.
Impact on everyday payments
NPCI’s funding rationale
NPCI says more than 95% of UPI P2M transaction volumes, consisting of payments up to ₹2,000, will remain exempt, while consumers will continue paying no transaction fee.
Merchant cost concerns
The new charge applies to qualifying P2M payments above ₹2,000, so larger merchant transactions will no longer be entirely free for the receiving business.
Protection for smaller businesses
NPCI’s funding rationale
P2PM merchants receiving up to ₹1 lakh monthly through eligible QR payments remain exempt, and a single payment above ₹2,000 does not automatically remove that exemption.
Merchant cost concerns
Merchants exceeding ₹1 lakh in monthly receipts for three consecutive months will move into the P2M category and become subject to the applicable framework.
- Standard MDR
- 0.4% on qualifying person-to-merchant UPI payments above ₹2,000.
- Maximum charge
- ₹300 per transaction for payments of ₹75,000 or more.
- Examples
- A ₹3,000 payment generates ₹12 MDR; a ₹50,000 payment generates ₹200; a ₹1 lakh payment is capped at ₹300.
- Who pays
- The merchant pays the MDR through the merchant payment ecosystem; consumers continue using UPI without transaction charges.
- Exemptions
- Person-to-person transfers and UPI merchant payments up to ₹2,000 remain free.
- Small merchants
- Eligible P2PM merchants receiving up to ₹1 lakh monthly through UPI QR codes directly into their bank accounts remain exempt.
- Special rates
- Railways, telecom, insurance, fuel and specified utilities face ₹5 above ₹2,000; capital-market transactions face 0.02%, capped at ₹300.
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 MDR rules explained: Where will you pay more from October 15? Check charges and exemptions
