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UPI Transaction Limits Differ From the ₹2,000 MDR Threshold
The ₹2,000 figure is not a limit on how much you can send through UPI.
It is a point above which certain merchant payments may have a payment-processing fee called MDR.
Payments to merchants of ₹2,000 or less will not have MDR under this framework.
Standard specified merchant payments above ₹2,000 may have an MDR of 0.4%, with a maximum fee of ₹300.
A ₹5,000 payment would therefore have ₹20 MDR.
UPI transaction limits are separate and decide whether a payment is allowed to go through.
These limits can vary by transaction type and may generally range from ₹1 lakh to ₹5 lakh.
Person-to-person transfers remain free, while some sectors have different MDR rules.
From October 15, 2026, MDR will apply to specified merchant transactions above ₹2,000.
Merchant payments of ₹2,000 or less will remain outside the MDR framework.
Standard specified merchant transactions above ₹2,000 carry 0.4% MDR, capped at ₹300.
UPI transaction limits determine whether a payment can be processed, while MDR determines applicable payment fees.
Person-to-person transfers remain free, while certain sectors and capital-market transactions have separate MDR structures.
- Who
- Users, merchants, banks, the National Payments Corporation of India, and payment participants are affected.
- What
- The article explains the difference between UPI transaction limits and the ₹2,000 MDR threshold for specified merchant payments.
- Where
- Within the UPI payment ecosystem.
- When
- The MDR framework described will apply from October 15, 2026.
- Why
- The distinction clarifies that ₹2,000 is an MDR threshold for certain merchant payments, not a general UPI transaction ceiling.
Key facts
- MDR start date
- October 15, 2026
- MDR threshold
- Specified merchant transactions above ₹2,000
- Standard MDR rate
- 0.4% for specified merchant transactions above ₹2,000
- Standard MDR cap
- ₹300
- UPI transaction limits
- Generally ₹1 lakh to ₹5 lakh, depending on transaction category
- Person-to-person transfers
- Remain free under the described framework
- Special sector MDR
- ₹5 for transactions above ₹2,000 in sectors including railways, telecom, insurance, fuel, and agricultural inputs
- Capital-market MDR
- 0.02%, capped at ₹300
Sources
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