UPI merchant payments above ₹2,000 to attract 0.4% MDR from Oct. 15, 2026
Finance Minister Nirmala Sitharaman said the 0.4% charge on UPI merchant transactions above ₹2,000 will be an inter-operator fee, not a tax or levy on consumers. Person-to-person transfers and routine retail payments will remain free for customers.
What happened
Unified Payments Interface (UPI) · Finance Minister Nirmala Sitharaman said a 0.4% MDR on UPI merchant payments above Rs 2,000 will be an inter-operator charge,
Key facts
- Rs 2,000
- 0.4%
- October 15, 2026
What changed
Finance Minister Nirmala Sitharaman said a 0.4% MDR on UPI merchant payments above Rs 2,000 will be an inter-operator charge, not a tax or consumer levy. P2P and routine retail payments remain free for customers.
Why this matters
Retailers should model the 0.4% UPI fee on merchant payments above ₹2,000 from Oct. 15, 2026, optimizing tender mix and pricing while keeping customer checkout messaging focused on continued fee-free payments.
What to watch
- Final RBI/NPCI operating circular defining applicable merchant categories, settlement mechanics, exclusions, and whether the ₹2,000 threshold is per transaction, invoice, or aggregate purchase.
- Clarification on MDR treatment for UPI-linked credit lines, RuPay credit cards on UPI, autopay, QR payments, and marketplace collection flows.
- Acquirer and payment-gateway pricing announcements, including whether the 0.4% is fully passed through and whether additional gateway fees apply.
- Merchant association pushback, discounting practices, and evidence of basket clustering or split-payment behavior around ₹2,000.
- Bank-funded UPI incentives or interchange revisions that offset merchant costs and limit payment steering.