NEW DELHI: India’s UPI payment system is set for a major shake-up. The National Payments Corporation of India (NPCI) has announced a 0.4% Merchant Discount Rate (MDR) on eligible person-to-merchant (P2M) UPI transactions above ₹2,000, with the new framework coming into effect from October 15, 2026.
Under the new structure, transactions of ₹2,000 or less will continue without MDR, while eligible merchant payments above the threshold will attract the new rate. For transactions of ₹75,000 and above, the MDR will be capped at ₹300.
NO UPI CHARGE FOR PERSON-TO-PERSON PAYMENTS
There is, however, an important relief for ordinary users. Person-to-person (P2P) UPI transfers will remain free, and the new MDR is not a blanket charge on every UPI transaction. The government has also clarified that consumers making UPI payments will not face transaction charges.
The new move is expected to have its biggest impact on larger payments made to merchants, as banks, payment aggregators and fintech companies prepare their systems for the October 15 rollout.
The announcement comes as UPI continues to dominate India’s digital payments landscape. The government has said the framework is intended to support the long-term sustainability, technological advancement and resilience of the UPI ecosystem.
For millions of UPI users, the message is clear: small payments remain protected, but large merchant transactions are entering a new charging regime from October 15.
Comments
Sign in with Google to comment.