A revised UPI Merchant Discount Rate (MDR) framework has been introduced on select merchant transactions, effective 15 October 2026, while keeping UPI free for consumers.
UPI transactions below Rs. 2,000 will remain completely free but MDR will be levied on transactions above Rs. 2,000.
MDR Framework
Transactions up to ₹2,000 will remain outside the scope of MDR.
Small merchants operating under Person-to-Person Merchant (P2PM) framework continue to benefit from zero MDR. This category supports small vendors receiving up to ₹1 lakh per month through UPI QR payments directly into their bank accounts, promoting digital payment acceptance across unorganised retail sector.
To further accelerate digital payments adoption, a dedicated fund for small merchants will be established to support digital payment infrastructure in existing merchants and Tier 3 and smaller markets.
Flat MDR of ₹5 per transaction will apply to UPI payments above ₹2,000 in specified merchant categories such as railways, telecom services, insurance, and fuel.
MDR of 0.4% applicable on P2M UPI transactions above ₹2,000, with MDR capped at ₹300 per transaction.
| Amount paid to Merchant | Applicable MDR | MDR paid by Merchant |
|---|---|---|
| Rs 2,000 | – | 0 |
| Rs 3,000 | 0.40% | 12 |
| Rs 50,000 | 0.40% | 200 |
| Rs 75,000 and above | Fixed Rs 300 | 300 |
No impact on small-value UPI transactions up to ₹2,000 for all merchants, which account for more than 95% of all UPI P2M transactions.
Revised UPI MDR remains lower than charges associated with several other digital payment instruments, including credit cards, debit cards, and wallets.
