UPI MDR Framework Effective 15 October 2026
Why in the news
A Merchant Discount Rate framework for UPI was introduced, to apply from 15 October 2026 on selected merchant payments.
What MDR is
- A processing fee on certain Person-to-Merchant (P2M) payments.
- Shared by banks, PSPs and UPI apps; not a tax or levy, so customers do not pay.
- Under the Payment and Settlement Systems Act, 2007.
Rate structure
| Category | MDR |
|---|---|
| All P2P payments | Zero |
| P2M above Rs 2,000 | 0.4% |
| Transactions above Rs 75,000 | Capped at Rs 300 |
| Essential sectors (railways, telecom, fuel, insurance, utility bills, farm inputs), over Rs 2,000 | Flat Rs 5 |
| Capital market (mutual funds, securities, brokers) | 0.02%, capped at Rs 300 |
Exemptions
- P2P, P2M up to Rs 2,000, RuPay debit card payments up to Rs 2,000.
- Small P2PM merchants, up to Rs 1 lakh monthly receipts.
- UPI AutoPay and Mandates.
- 5% of collections fund UPI adoption among small merchants.
About UPI
- Real-time, 24/7 payment system built by NPCI.
- Accepted in 11 countries, including Cambodia, Qatar and France.
Exam angle
- Effective date: 15 October 2026.