Centre sets 0.4% fee on UPI merchant payments above Rs 2,000, ends zero-MDR regime

The government on Tuesday introduced a revised framework for UPI merchant payments, with transactions above Rs 2,000 attracting a Merchant Discount Rate (MDR) of 0.4 per cent, capped at Rs 300 per transaction, from October 15, 2026.

Consumers will continue to use UPI free of cost, while person-to-person (P2P) transactions and person-to-merchant (P2M) payments up to Rs 2,000 will remain outside the MDR regime. The government said these low-value transactions account for more than 95 per cent of all UPI P2M transactions.