PhonePe says 96% of UPI payments will stay free under proposed MDR rules
PhonePe CEO Sameer Nigam said a 0.4% MDR on merchant UPI transactions above Rs 2,000, effective Oct. 15, 2026, would leave 96% of payments free. Charges would be capped at Rs 300 for transactions of Rs 75,000 or more.
What happened
PhonePe CEO Sameer Nigam said 96% of UPI payments will remain free after India introduces a 0.4% MDR on merchant transactions above Rs 2,000. The charge, capped
Key facts
- 0.4% MDR on merchant UPI transactions above Rs 2,000
- 96% of UPI transactions expected to remain free
- Rs 300 MDR cap for transactions of Rs 75,000 and above
- Rs 2,000 free-payment threshold
What changed
PhonePe CEO Sameer Nigam said 96% of UPI payments will remain free after India introduces a 0.4% MDR on merchant transactions above Rs 2,000. The charge, capped at Rs 300, is intended to help payment providers recover operating costs.
Why this matters
Retailers should prepare to absorb or pass through a 0.4% fee on merchant UPI transactions above Rs 2,000 from Oct. 15, 2026, while keeping checkout messaging focused on the 96% of payments expected to remain free.
What to watch
- Final government or NPCI notification confirming the Oct. 15, 2026 start date, scope, exemptions and enforcement process.
- Clarification on whether the threshold applies per transaction, invoice, merchant-day total, or specific merchant categories.
- Rules governing merchant surcharge, consumer disclosure and payment-method-specific discounts.
- UPI PSP and acquirer pricing announcements, including any additional platform, gateway or settlement charges.
- Retailer data showing the share of merchant UPI GMV and orders above Rs 2,000.