Official: UPI MDR is coming from October 15, 2026 ✅

A new Merchant Discount Rate (MDR) framework will apply to select Person-to-Merchant (P2M) UPI transactions.

💰 Standard MDR
→ Up to ₹2,000 → 0% MDR
→ Above ₹2,000 → 0.4% MDR
→ ₹75,000+ → ₹300 maximum per transaction

📊 Examples
→ ₹3,000 → ₹12 MDR
→ ₹50,000 → ₹200 MDR
→ ₹1,00,000 → ₹300 MDR, instead of ₹400

👤 Consumers won’t be charged
→ UPI payments remain free for consumers
→ P2P transfers remain free
→ No monthly fee/transaction quota for consumers
→ UPI apps cannot add a platform fee
→ Merchants cannot pass the MDR on to customers

🏪 Small merchants are protected:
→ P2PM merchants receiving up to ₹1 lakh/month through UPI QR remain at 0% MDR
→ Existing QR codes and soundboxes continue to work
→ GST registration isn’t required for P2PM zero-MDR eligibility
→ Merchants crossing ₹1 lakh/month for 3 consecutive months can transition to P2M

🏦 Special categories
→ Railways, telecom, insurance, fuel & certain other sectors → ₹5 flat MDR above ₹2,000
→ Capital-market payments → 0.02% MDR, capped at ₹300
→ Utility payments above ₹2,000 → ₹5 flat MDR
→ Education payments above ₹2,000 → flat/capped structures as specified

The government says MDR revenue will support:
→ UPI infrastructure & resilience
→ Cybersecurity and fraud detection
→ Innovation and technology upgrades
→ Customer service
→ Merchant onboarding and digital-payment expansion
💡 A dedicated fund is also proposed to support small merchants, particularly in Tier 3–6 centres, the Northeast, J&K and Ladakh, with the detailed framework to be finalised with RBI consultation.

UPI processed 2,451 crore transactions worth ₹29.9 lakh crore in August 2026, according to the FAQ. The government says the scale of the network requires a more sustainable funding model.

Consumers continue paying ₹0.
The MDR is a merchant-side charge on eligible P2M transactions above ₹2,000, with exemptions and special rates for several categories.

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