New Delhi, September 15, 2026 (Yes Punjab News)
The National Payments Corporation of India (NPCI) on Tuesday announced a revised Merchant Discount Rate (MDR) framework for select UPI transactions, with charges to apply to certain merchant payments above Rs 2,000 from October 15, 2026.
The revised framework will not affect consumers, who will continue to use UPI without paying transaction charges. More than 95% of low-value UPI Person-to-Merchant (P2M) transactions involving payments of up to Rs 2,000 will remain outside the MDR framework.
Under the revised structure, an MDR of 0.4% will apply to specified P2M UPI transactions above Rs 2,000, subject to a maximum charge of Rs 300 per transaction.
A flat MDR of Rs 5 per transaction will apply to UPI payments above Rs 2,000 in selected merchant categories, including railways, telecom services, insurance and fuel.
Person-to-Person (P2P) transactions will continue to remain free, while P2M transactions up to Rs 2,000 will also remain outside the MDR framework. As a result, consumers will not have to pay transaction charges for using UPI.
Small merchants covered under the Person-to-Person Merchant (P2PM) framework will also continue to benefit from zero MDR. The category covers small vendors receiving up to Rs 1 lakh per month through UPI QR payments directly into their bank accounts, supporting digital payment adoption across the unorganised retail sector.
The revised framework also proposes a dedicated fund to expand UPI acceptance among small merchants, particularly across existing merchant networks and Tier-3 and smaller markets. The initiative is aimed at strengthening digital payment infrastructure and encouraging more small businesses to adopt UPI.
According to the framework, MDR collected from higher-value transactions will be distributed among participants across the UPI ecosystem. The funds are expected to support investments in payment infrastructure, resilience, cybersecurity and innovation, besides helping expand UPI adoption among new users and merchants.
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