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UPI Fees Arrive: MDR on Big Merchant Payments From Oct 2026
15 Sep
Summary
- UPI fees will apply to merchant transactions over Rs 2,000 from October 2026.
- Person-to-person UPI payments will remain entirely free, regardless of amount.
- Essential sectors like railways and telecom will have a lower MDR of Rs 5.
Starting October 15, 2026, the Unified Payments Interface (UPI) will implement changes to its fee structure, introducing a Merchant Discount Rate (MDR) for certain person-to-merchant (P2M) transactions. P2P UPI payments will remain free for users, irrespective of the transaction amount or frequency, ensuring continued ease for personal transfers.
For P2M transactions exceeding Rs 2,000, an MDR of 0.4 percent will apply, with a cap of Rs 300 for payments of Rs 75,000 or more. Importantly, this MDR is a merchant-side charge and will not be passed on to customers. Essential service categories, including railways, telecom, and fuel, will benefit from a specific MDR of Rs 5 for transactions above Rs 2,000.
Payments related to mutual funds and stock brokers will attract a nominal MDR of 0.02 percent, capped at Rs 300. Small merchants with monthly UPI collections up to Rs 1 lakh will continue to enjoy zero MDR. These adjustments are designed to support UPI's ongoing expansion and financial sustainability.
