MDR charges on 5 key services people avail
From October 15, 2026, merchants making UPI transactions will be subject to the Merchant Discount Rate (MDR) on select services. The MDR rates vary depending on the industry or category of the merchant's operation, with a flat Rs 5 charged per transaction above Rs 2,000 in specific sectors. These sectors include railways, telecommunications, insurance, fuel, and agricultural inputs.
For example, if a customer pays Rs 3,000 for a railway ticket using UPI, the merchant will incur an MDR of Rs 5. Similarly, an insurance premium payment of Rs 5,000 through UPI will also attract a Rs 5 MDR. Importantly, the Rs 5 charge is a cost incurred by the merchant and is not an additional fee passed on to the customer.
Banks and UPI application providers are instructed not to impose platform fees or hidden charges on merchants. The MDR will be shared among various payment ecosystem participants, including banks, payment service providers, and UPI application providers. Merchants cannot recover the Rs 5 MDR from customers, and UPI users will continue to have unlimited free usage with no monthly quotas or volume restrictions.
Daily transaction limits set by banks and the National Payments Corporation of India (NPCI) serve as security and risk-management safeguards, not as charging thresholds.
Written by urgent.news from The Economic Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
