India popular Unified Payments Interface (UPI) is set for a major change from October 15, 2026, with a new Merchant Discount Rate (MDR) being introduced on certain high-value merchant transactions. The move has created confusion among users about whether they will have to pay extra charges while making UPI payments.
Under the new framework, a 0.4% MDR will apply to specified person to merchant (P2M) UPI transactions above ₹2,000. For example, a merchant receiving a ₹10,000 eligible UPI payment would attract an MDR of ₹40. For transactions of ₹75,000 or more, the MDR will be capped at ₹300.
However, ordinary UPI users will not be directly charged for making these payments. Person-to-person (P2P) UPI transfers will continue to remain free, irrespective of the amount. Payments to merchants up to ₹2,000 will also remain free. The government says around 96% of P2M transactions will remain unaffected by the new framework. Eligible small merchants will also receive exemptions under the new system. The government says the framework is intended to support the long term sustainability, security and expansion of India digital-payment infrastructure.
