Who has to pay MDR on UPI and who stands to gain the most? | Explained
The National Payments Corporation of India has announced new Merchant Discount Rate (MDR) charges for UPI transactions exceeding ₹2,000, effective October 2026. The government maintains that these fees will not be passed on to consumers and are intended to support financial market participation.
Why it matters
As UPI is a primary payment method in India, changes to its fee structure impact millions of merchants and the digital economy's sustainability.
The story so far : After much speculation and debate, the National Payments Corporation of India (NPCI) has finally released its circular about the additional charges it will allow to be levied on certain UPI payments from October 15, 2026. While the Opposition has argued that this charge will increase prices for consumers, the government has argued that this will not happen, and that even the impact on merchants will be minimal.
The Hindu has previously explained what the MDR charge is, in the context of UPI. In short, it is a fee for using UPI that will be paid by merchants to payment processors and banks. Consumers will not have to directly pay the MDR.
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