UPI Charges Above ₹2,000 From October 15: What Consumers and Merchants Need to Know

Starting October 15, 2026, selected UPI transactions above ₹2,000 made to merchants will attract a Merchant Discount Rate (MDR) of 0.4%. The new UPI charges will apply to merchants, while consumers will continue to use UPI without transaction charges.

According to the National Payments Corporation of India (NPCI), the revised UPI MDR framework applies to specified Person-to-Merchant (P2M) transactions above ₹2,000. The MDR will be capped at ₹300 per transaction for payments of ₹75,000 and above.

Will Consumers Have to Pay UPI Charges?

No. Consumers will continue to use UPI free of charge. Payments made to merchants up to ₹2,000 will remain outside the MDR framework.

Similarly, Person-to-Person (P2P) UPI transactions will remain free, regardless of the amount transferred. This includes sending money to family members, friends and other individuals, as well as self-transfers between linked bank accounts.

How Much Is the New UPI MDR?

For eligible merchant transactions above ₹2,000, the MDR will be 0.4%.

For example:

- ₹3,000 UPI merchant payment → ₹12 MDR

- ₹50,000 UPI merchant payment → ₹200 MDR

- ₹75,000 or more → MDR capped at ₹300

The charge is part of the merchant payment ecosystem and is not a tax collected from consumers by the government or NPCI.

Special ₹5 UPI Charge for Certain Sectors

Certain categories will have a flat ₹5 MDR on eligible UPI payments above ₹2,000. These include sectors such as:

- Railways

- Telecommunications

- Insurance

- Fuel

- Certain other specified essential services

The flat-rate structure is intended to provide greater cost certainty for sectors with high transaction volumes or relatively narrow margins.

Small Merchants Remain Exempt

Small merchants receiving up to ₹1 lakh per month through UPI QR payments under the applicable small-merchant category will continue to receive payments without MDR. This provision is intended to protect street vendors, neighbourhood shops and other small businesses from additional payment costs.

Most UPI Merchant Transactions Will Remain Free

The new UPI charges 2026 will not affect most low-value merchant transactions. According to the government, around 96% of P2M UPI transactions will remain unaffected, either becaususe they are below the ₹2,000 threshold or because they fall under the zero-MDR framework for eligible small merchants.

The revised UPI MDR framework is intended to support continued investment in UPI infrastructure, cybersecurity, innovation and customer services, while keeping everyday UPI payments free for consumers.

UPI Charges: Key Points

The key changes from October 15, 2026 are:

UPI payments up to ₹2,000: No MDR

P2P UPI transfers: Free, regardless of amount

Eligible P2M payments above ₹2,000: 0.4% MDR

Payments of ₹75,000 and above: MDR capped at ₹300

Specified sectors: Flat ₹5 MDR on eligible payments above ₹2,000

Eligible small merchants: Zero MDR under the applicable threshold

Consumers: No direct UPI transaction charge

Overall, the revised framework introduces UPI MDR charges for selected higher-value merchant transactions, while keeping everyday UPI payments and person-to-person transfers free for consumers.