The Centre has introduced a new Merchant Discount Rate (MDR) framework for certain UPI merchant transactions above Rs. 2,000 from 15 October 2026. The government has clarified that this is not a tax on UPI users and that person-to-person payments will remain free.
Under the new framework, a 0.4% MDR will apply to specified merchant transactions above Rs. 2,000, with a maximum MDR of Rs. 300 for transactions of Rs. 75,000 and above. Small merchants receiving up to Rs. 1 lakh per month through UPI QR codes will remain under the zero-MDR framework.
Payments above Rs. 2,000 in sectors including railways, telecommunications, insurance, fuel and agricultural inputs will attract a Rs. 5 MDR. The government says customers will not be charged MDR directly.
The Centre has introduced a new Merchant Discount Rate (MDR) framework for certain UPI merchant transactions above Rs. 2,000 from 15 October 2026. The government has clarified that this is not a tax on UPI users and that person-to-person payments will remain free.
Under the new framework, a 0.4% MDR will apply to specified merchant transactions above Rs. 2,000, with a maximum MDR of Rs. 300 for transactions of Rs. 75,000 and above. Small merchants receiving up to Rs. 1 lakh per month through UPI QR codes will remain under the zero-MDR framework.
Payments above Rs. 2,000 in sectors including railways, telecommunications, insurance, fuel and agricultural inputs will attract a Rs. 5 MDR. The government says customers will not be charged MDR directly.
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