The UPI MDR framework will change from October 15, 2026, with the National Payments Corporation of India (NPCI) introducing charges on selected Person-to-Merchant (P2M) transactions above ₹2,000. Consumers will continue to make UPI payments without any transaction fee.
Under the revised framework announced on September 15, eligible P2M UPI payments above ₹2,000 will attract an MDR of 0.4%, subject to a maximum charge of ₹300 per transaction. The new framework is aimed at supporting investment in UPI infrastructure, resilience, cybersecurity, innovation and customer service.
UPI MDR rules for consumers and small merchants
Person-to-Person (P2P) transactions will remain free, while P2M payments up to ₹2,000 will also remain outside the MDR framework. NPCI said these small-value transactions account for more than 95% of total UPI P2M transaction volume.
Small merchants covered under the Person-to-Person Merchant (P2PM) framework will continue to have zero MDR. The P2PM category covers small vendors receiving up to ₹1 lakh per month through UPI QR payments directly into their bank accounts.
NPCI will also establish a dedicated fund to support digital payment infrastructure among existing small merchants and in Tier 3 and smaller markets.
₹5 flat MDR for selected categories
Certain merchant categories will follow a flat ₹5 MDR for UPI payments above ₹2,000 instead of the 0.4% rate. These include railways, telecom services, insurance and fuel, among other specified categories. Public utility payments such as electricity, water and piped natural gas above ₹2,000 will also attract a concessional flat MDR of ₹5.
Capital market transactions have a separate MDR of 0.02%, capped at ₹300. This applies to UPI payments involving mutual funds, securities, SEBI-registered stockbrokers, securities dealers and investment platforms, including equity purchases, debt investments, mutual fund purchases and broker wallet top-ups.
For the standard 0.4% rate, a ₹3,000 payment would result in ₹12 MDR, while a ₹50,000 payment would attract ₹200. Transactions of ₹75,000 and above are capped at ₹300.
NPCI also said merchants cannot pass the MDR on to UPI customers. UPI applications will not charge consumers a platform fee for UPI payments.
Q1. When will the new UPI MDR framework take effect?
The revised UPI MDR framework will take effect from October 15, 2026.
Q2. What is the UPI MDR for payments above ₹2,000?
Eligible P2M UPI transactions above ₹2,000 will attract 0.4% MDR, capped at ₹300 per transaction.
Q3. Will consumers have to pay for UPI transactions?
No. Consumers will continue to use UPI without transaction charges.
Q4. Will UPI payments below ₹2,000 attract MDR?
No. P2M transactions up to ₹2,000 will remain outside the MDR framework.
Q5. Which UPI transactions will have a flat ₹5 MDR?
Specified categories such as railways, telecom services, insurance and fuel will attract a flat ₹5 MDR on transactions above ₹2,000. Public utility payments such as electricity, water and piped natural gas are also covered by the concessional ₹5 rate.
Source: NPCI UPI Circulars
