10 UPI transactions that will attract MDR charges

The new Unified Payments Interface (UPI) framework, set to commence on October 15, 2026, will introduce Merchant Discount Rate (MDR) charges on certain transactions. However, person-to-person payments will remain free of charge, regardless of the amount.

Merchant transactions exceeding Rs 2,000 will attract MDR charges, while those below this threshold will not. Additionally, payments related to essential services and capital market transactions above Rs 2,000 will also attract MDR charges. The MDR rates vary depending on the type of transaction and sector.

For merchant transactions above Rs 2,000, the MDR rate is 0.4%. Moreover, a nominal MDR of 0.4% will apply to person-to-merchant (P2M) transactions exceeding Rs 2,000. Payments related to essential sectors such as railways, telecommunications, insurance, fuel, and agricultural input transactions above Rs 2,000 will attract a flat MDR of Rs 5 per transaction.

For capital market transactions, such as mutual fund, securities, stockbroker, and dealer-related payments, an MDR of 0.02% will apply, capped at Rs 300 per transaction. This separate MDR rate for capital market transactions ensures that these transfers are distinct from routine shopping or general service payments.

The Ministry of Finance clarifies that customers will not be charged MDR. Banks and UPI application providers are strictly prohibited from imposing MDR charges on customers. Transaction limits set by banks and the National Payments Corporation of India (NPCI) are security measures rather than charging thresholds. MDR calculations follow a transparent formula based on transaction value thresholds, with a maximum cap of Rs 300 for transactions above Rs 75,000.