UPI charges from October 15: What the new MDR rules mean for consumers and merchants

From October 15, 2026, eligible person-to-merchant (P2M) UPI transactions above Rs 2,000 will attract a 0.4% Merchant Discount Rate (MDR). The charge will be paid within the merchant-payment ecosystem, not directly by consumers.

Customers can continue making UPI payments without a customer-facing charge. Merchants are not permitted to add the MDR as a separate UPI surcharge to the customer's bill. Person-to-person (P2P) transfers will also remain free.

P2M transactions of Rs 2,000 or less will continue to have zero MDR. The framework indicates that more than 95% of P2M transaction volume falls within this category, while around 4% of merchant transactions are expected to be affected by the new MDR.

The 0.4% charge is capped at Rs 300 per transaction for payments of Rs 75,000 and above. Eligible small merchants receiving up to Rs 1 lakh a month through UPI QR payments will continue to enjoy zero MDR.

The standard 0.4% rate will not apply universally. Certain sectors, including railways, telecom, insurance and fuel, will have a flat Rs 5 MDR for eligible transactions above Rs 2,000. Capital-market transactions will have a separate 0.02% rate, capped at Rs 300.