The National Payments Corporation of India (NPCI), which operates India’s UPI payment system, has introduced a revised Merchant Discount Rate (MDR) framework for select UPI transactions. The new rules will apply from October 15, 2026, bringing charges for certain high-value person-to-merchant (P2M) payments.
Which UPI Transactions Will Attract Charges?
Under the revised framework, a 0.4% MDR will apply to P2M UPI transactions above ₹2,000. However, four specified categories—railway ticketing, telecom, insurance and fuel—will attract a flat ₹5 charge per transaction, irrespective of the transaction amount. Person-to-person (P2P) transfers will remain exempt from MDR.
What Are the New UPI MDR Charges?
For most eligible merchants, the MDR will be calculated at 0.4% of the transaction value, subject to a maximum cap of ₹300 per transaction for payments of ₹75,000 and above. For example, a ₹10,000 payment to a regular merchant would attract ₹40 in MDR. At ₹20,000, the charge would be ₹80, while a ₹50,000 transaction would attract ₹200. At ₹1 lakh, 0.4% would amount to ₹400, but the ₹300 cap would apply. For railway, telecom, insurance and fuel payments, the charge will remain ₹5.
Will Customers Be Charged for UPI Payments?
The revised MDR is a merchant-side charge, meaning customers are not automatically required to pay an additional fee simply because they make a UPI payment. A separate gazette notification has also formally barred direct or indirect charges on UPI transactions up to ₹2,000, as well as on RuPay debit-card payments.
Will UPI Apps Charge a Platform Fee?
The MDR framework is different from a platform or convenience fee that an individual UPI app may choose to levy. The new rules do not automatically mean that customers will be charged a platform fee for every UPI payment. The revised framework is therefore primarily aimed at how eligible merchant transactions are funded, while ordinary users can continue making UPI payments without an automatic customer-side MDR.
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Shamshad Ali is a New Delhi–based journalist with over six years of experience spanning breaking news writing, on-the-ground reporting, and editing. When he isn’t chasing headlines, Shamshad is usually exploring new destinations, discovering hidden culinary gems, and striking up conversations with strangers. Many of whom turn out to be great sources, and even better friends. He can be reached at shamshadali.dar@gmail.com.
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