Merchants to now pay fees on UPI transactions above Rs 2,000 from Oct 15
The National Payments Corporation of India has announced a 0.4% Merchant Discount Rate on UPI transactions exceeding Rs 2,000 starting October 15, 2026. Small-value transactions and person-to-person transfers will remain free of charge.
Why it matters
This policy shift aims to balance the sustainability of the digital payment ecosystem with the continued accessibility of UPI for everyday consumers.
The National Payments Corporation of India (NPCI) has notified a Merchant Discount Rate (MDR) of 0.4% on Person-to-Merchant (P2M) UPI transactions above Rs 2,000. Person-to-person transactions will continue to remain free.For transactions of Rs 75,000 and above, the MDR will be capped at Rs 300 per transaction.The MDR will be effective from October 15, 2026. . This timeline gives acquiring banks, payment aggregators, fintech applications, and corporate accounting platforms adequate lead time to update their software engines and billing systems.There is no impact on small-value UPI transactions up to Rs 2,000, which comprise more than 95% of the total volume of UPI (P2M) transactions.The intent of levying reasonable MDR is to ensure that UPI remains, accessible and convenient for everyday transactions while supporting long-term ecosystem sustainability.A 22-member panel representing banks, payment service providers and various industry associations met to decide on the charges that merchants have to pay for UPI…
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