UPI Rule Change From October 15: 0.4% MDR on Payments Above ₹2,000

UPI Payments Above ₹2,000 To Attract 0.4% Merchant Fee From October 15; Customers Won’t Pay

India’s Unified Payments Interface (UPI) payment system is set for a major change from October 15, 2026, with a 0.4% Merchant Discount Rate (MDR) being introduced on eligible person-to-merchant (P2M) transactions above ₹2,000. The charge will be borne by merchants, not customers. 

What is changing?

Under the new framework, merchants will face a 0.4% MDR when customers make eligible UPI payments exceeding ₹2,000. For transactions of ₹75,000 or more, the MDR will be capped at ₹300. 

Importantly, customers will continue to use UPI without paying a transaction fee. Merchants also cannot pass the MDR directly on to consumers. 

Payments below ₹2,000 remain free

UPI transactions of up to ₹2,000 remain protected from direct or indirect charges. The government has also clarified that person-to-person (P2P) UPI transfers, such as sending money to friends or family, will continue to remain free. 

Special categories

Certain essential services, including railways, telecom, insurance and fuel, will attract a flat ₹5 MDR on eligible transactions above ₹2,000 rather than the standard 0.4% rate. 

The move is aimed at supporting investment in UPI infrastructure, innovation, cybersecurity and customer-service systems, while keeping the payment platform free for consumers.