NPCI introduces 0.4% MDR charge on UPI payments above ₹2,000, exempts small merchants, person-to-person transfers

The National Payments Corporation of India (NPCI) has introduced a Merchant Discount Rate (MDR) charge of 0.4% that large merchants will have to pay banks and payment processors on UPI payments they receive in excess of ₹2,000 per transaction, it said in a circular issued on Tuesday (September 15, 2026).

All person-to-person UPI transactions and UPI transactions to small vendors will be exempt from the charges, as will person-to-merchant transactions of a value less than ₹2,000 per transaction done on UPI or through RuPay debit cards.

“For person-to-person (P2P) transactions, there will be no charges at all, irrespective of transaction value,” the Ministry of Finance said in a release. “P2P transactions constitute 37% of the total UPI transaction in volume terms and 70% in value terms.”

“Charges will apply only to person-to-merchant (P2M) transactions exceeding ₹2,000,” it added.