Proposed UPI MDR on Merchant Payments From 15 October 2026: Slabs, Caps and Exemptions
FAQs dated 15 September 2026 describe a proposed Merchant Discount Rate (MDR) framework for selected Person-to-Merchant (P2M) UPI payments. The stated goal is a commercially sustainable base for the UPI ecosystem while keeping UPI free for consumers and protecting small-value payments. The framework is stated to take effect from 15 October 2026.
Why an MDR
According to the FAQs:
- UPI handles billions of transactions every month, and MDR revenue is meant to fund infrastructure resilience, innovation, cybersecurity and customer service.
- UPI charges are stated to be well below those of credit cards, debit cards and wallets.
- More than 95% of UPI P2M volume is stated to be in transactions of up to Rs 2,000, so those payments are untouched.
- The model is meant to reduce dependence on government subsidy and give predictable funds for technology, fraud prevention, server bandwidth and banking support, and it may help fintech start-ups compete with well-capitalised players.
- UPI is stated to have live payment services in 11 foreign countries as of 2026, and to have processed 2,451 crore transactions valued at Rs 29.9 lakh crore in August 2026.
The Core Rate Structure
| Transaction value | MDR |
|---|---|
| Up to Rs 2,000 | Nil |
| Above Rs 2,000 and below Rs 75,000 | 0.40% of transaction value |
| Rs 75,000 and above | 0.40%, capped at Rs 300 per transaction |