Targeted UPI MDR framework to raise payment-acceptance costs for larger merchant transactions
From Oct. 15, 2026, a reported UPI MDR framework would retain free consumer and small-ticket payments while applying 0.4% MDR on select merchant payments above Rs 2,000, capped at Rs 300. QR merchants collecting up to Rs 1 lakh a month would remain exempt.
What happened
India will introduce a targeted UPI merchant discount rate framework from October 15, 2026. Consumers and P2P transfers remain free, while select merchant
Key facts
- October 15, 2026
- 0.4% MDR on standard P2M payments above Rs 2,000
- Rs 300 MDR cap for transactions of Rs 75,000 and above
- Zero MDR for P2M transfers
- Zero MDR for P2M payments up to Rs 2,000
- Zero MDR for QR-code merchants collecting up to Rs 1 lakh monthly under P2PM
- Rs 5 flat MDR for qualifying railways, telecom, insurance and fuel payments above Rs 2,000
- 0.02% MDR, capped at Rs 300, for capital-market transactions
- UPI processed 2,451 crore transactions worth Rs 29.9 lakh crore in August 2026
- 5% of MDR collections earmarked for a digital-payment infrastructure fund
Why this matters
Prioritize partnerships or acquisitions in payment orchestration, routing and merchant analytics that help enterprise retailers steer high-value UPI flows, reduce acceptance costs and optimize tender mix.