Stories
UPI Payments Remain Free for Customers Despite New MDR Policy from October 15
- •From October 15, 2026, NPCI will introduce a new Merchant Discount Rate (MDR) policy for certain UPI transactions.
- •A 0.4% MDR will apply to some payments exceeding ₹2,000, but UPI payments will remain free for customers.
- •The new MDR must be paid by eligible merchants and should not be added to the customer's bill.
- •Person-to-person (P2P) transfers and regular merchant payments of ₹2,000 or less will not incur MDR.
- •For transactions of ₹75,000 or more, the MDR will be capped at a maximum of ₹300, to be borne by the merchant.
Key Questions Answered
No, customers do not have to pay any additional fees or charges when using UPI for their purchases. UPI payments remain completely free for consumers, and merchants are strictly prohibited from adding the new merchant discount rate to a customer's bill.
Beginning October 15, 2026, the National Payments Corporation of India is introducing a 0.4 percent Merchant Discount Rate for specific merchant UPI transactions exceeding ₹2,000. This fee must be borne entirely by eligible merchants rather than the everyday consumer.
Not all transactions are subject to the new policy, as person-to-person transfers, UPI Autopay, regular merchant payments of ₹2,000 or less, and transactions involving small merchants earning up to ₹1 lakh per month are completely exempt from MDR.
