New Delhi, September 15: The National Payments Corporation of India (NPCI) has announced a revised Merchant Discount Rate (MDR) framework for select person-to-merchant UPI transactions, effective October 15, 2026.
Under the framework, UPI will remain free for consumers. Person-to-person transactions and merchant payments of up to ₹2,000 will also remain outside the scope of MDR.
The MDR is a fee paid by merchants to payment-service providers for processing digital transactions and is not a direct charge on customers.
A flat MDR of ₹5 per transaction will apply to UPI payments above ₹2,000 in specified categories such as railways, telecommunications, insurance and fuel.
Other eligible merchant transactions above ₹2,000 will attract an MDR of 0.4 per cent, capped at ₹300 per transaction.
Small merchants operating under the person-to-person merchant framework will continue to enjoy zero MDR on UPI QR payments deposited directly into their bank accounts, subject to monthly receipts of up to ₹1 lakh.
NPCI said small-value UPI merchant payments of up to ₹2,000, accounting for more than 95 per cent of such transactions, would remain unaffected.
A dedicated fund is also proposed to help small merchants expand digital-payment infrastructure in Tier-II, Tier-III and smaller markets.
The MDR collected from high-value transactions will be distributed among participants in the UPI ecosystem to support expansion, system resilience, cybersecurity and technological innovation.
The revised charges will remain lower than those associated with several other digital-payment instruments, including credit cards, debit cards and wallets.
