© 2026 telugu.digital
Under the new framework, the government has introduced a 0.4% MDR on P2M (person-to-merchant) UPI transactions above Rs 2,000, capped at Rs 300 for transactions of Rs 75,000 and above.
The government has introduced a 0.4% fee on UPI transfers exceeding Rs 2,000 to merchants from October 15, while explicitly ring-fencing everyday person-to-person transactions as well as small payments from any charge.
UPI has been free for years, but that may be about to change — and the numbers behind it are bigger than they first appear. A new 0.4% MDR on transactions above Rs 2,000 could reshape who ultimately pays for India’s most-used digital payment system.
Effective October 15, UPI payments to merchants (P2M) above Rs 2,000 will attract a 0.4% merchant discount rate with an overall cap of Rs 300. Besides, a flat concessional MDR rate of Rs 5 would be applicable on specific merchant categories such as railways, telecom services, insurance, and fuel for transaction above Rs 2,000.
Effective October 15, UPI payments to merchants (P2M) above Rs 2,000 will attract a 0.4 per cent MDR with an overall cap of Rs 300. Besides, a flat concessional MDR of Rs 5 would be applicable on specific merchant categories such as railways, telecom services, insurance, and fuel for transaction above Rs 2,000.
Effective October 15, UPI payments to merchants (P2M) above Rs 2,000 will attract a 0.4% merchant discount rate with an overall cap of Rs 300. Besides, a flat concessional MDR rate of Rs 5 would be applicable on specific merchant categories such as railways, telecom services, insurance, and fuel for transaction above Rs 2,000.
The 0.4% UPI MDR fee has also been criticised by the opposition.
UPIs new MDR framework will change how large merchant payments are charged. This and more in todays ETtech Top 5.
The government has introduced a 0.4 per cent fee on UPI payments of more than Rs 2,000 made to merchants from October 15. Under this, a merchant discount rate (MDR) of 0.4 per cent is to be levied on person-to-merchant transactions of above Rs 2,000. However, no MDR is to be levied on UPI transactions of up to Rs 2,000.
"The decision had already been taken and there was “no question of reversing it”, the government source said.
Starting on October 15, banks and payment applications will begin earning revenue from select merchant UPI transactions. Transactions under Rs 2000 will remain exempt from new fees, while person-to-person transfers and small vendor payments under Rs 1 lakh are still free. Merchants will incur a charge of up to forty basis points for transactions over Rs 2000.
UPI AutoPay payments for OTT subscriptions, bills and SIPs remain outside the new prescribed MDR framework. Here's what the latest rules mean for users. | India News
A new UPI framework will implement fees on certain merchant transactions while keeping person-to-person payments and transactions under two thousand rupees free of charge.
The NPCI has unveiled a new merchant discount rate that introduces a 0.4% fee for UPI person-to-merchant transactions exceeding Rs 2000. This policy change has elicited mixed reactions from industry leaders. While some view it as a step toward enhancing financial sustainability within the digital payments landscape, others raise concerns about its potential effects on investment and trading activities.
While some criticised the MDR charges on UPI transactions, many welcomed the move saying it was much needed. | India News
Payments to merchants, or person-to-merchant (P2M) transactions, of up to Rs 2,000, will remain free, but payments above this threshold will attract o.4% MDR.