The National Payments Corporation of India (NPCI) has announced a new Merchant Discount Rate (MDR) framework for UPI transactions, set to take effect on October 15, 2026. Under the new policy, a 0.4% MDR will apply to Person-to-Merchant (P2M) transactions exceeding ₹2,000, with a maximum cap of ₹300 per transaction for payments of ₹75,000 and above. Transactions below ₹2,000 will remain free of charge for both consumers and merchants.
Small merchants operating under the Person-to-Person-Merchant (P2PM) framework, who receive up to ₹1 lakh per month, will continue to be exempt from MDR charges. Additionally, specific sectors such as railways, fuel, insurance, and public utilities will be subject to a flat fee of ₹5 for transactions over ₹2,000, while capital market transactions will incur a nominal 0.02% fee capped at ₹300.
NPCI clarified that standard Person-to-Person (P2P) transfers, such as sending money to friends or family, will remain free. The organization stated that the new commercial model is designed to ensure the long-term sustainability of the UPI ecosystem, funding infrastructure, cybersecurity, and innovation without imposing costs on individual consumers.
