The National Payments Corporation of India will apply a merchant discount rate of 0.4 percent to person-to-merchant UPI transactions above Rs 2,000 from October 15, 2026. For transactions of Rs 75,000 and above, the charge is capped at Rs 300 per transaction. NPCI published the framework in a frequently asked questions document headed 15th Sept. 2026. The document states that operational parameters, fee distribution models and category caps are decided by the UPI and Services Steering Committee, headed by NPCI.
Transactions up to Rs 2,000 remain free of MDR. NPCI puts payments below that threshold at more than 95 percent of total P2M UPI volume. Person-to-person transactions continue to be free of cost for both payer and beneficiary. Recurring standing instructions set up as UPI Mandates or AutoPay do not carry prescribed MDR charges. Small vendors in the P2PM category, defined as merchants receiving up to Rs 1 lakh per month through UPI QR directly into their accounts, continue at zero MDR. Acquiring banks apply a transaction velocity check against that threshold. Merchants with inward UPI credit above Rs 1 lakh per month for three consecutive months are transitioned to the P2M category.
Two concessional tiers sit alongside the headline rate. Railways, telecom services, insurance and fuel merchants pay a flat Rs 5 per transaction above Rs 2,000. Capital market payments to mutual funds, securities, stockbrokers and dealers are priced at 0.02 percent of transaction value with a maximum of Rs 300. Credit-linked UPI payments, including RuPay credit cards on UPI and pre-sanctioned bank credit lines, follow standard credit card guidelines rather than this framework.
Merchants that have been onboarded cannot pass MDR charges to customers. UPI app providers are barred from charging a platform fee or any other charge for a payment made through UPI. NPCI will finalise the operational framework for a dedicated small-merchant fund in consultation with the Reserve Bank of India within the next three months.