UPI P2P transfers stay free; 0.4% MDR to apply on select merchant payments above ₹2,000

The government has clarified that peer-to-peer UPI transfers carry no levy at any value. From October 15, a 0.4% MDR will apply to specified merchant payments above ₹2,000, while QR merchants receiving up to ₹1 lakh a month via UPI remain exempt.

— Source publishedTue, 15 Sept, 2026, 23:28 IST·First seen Wed, 16 Sept, 2026, 00:01 IST·Source NDTV Profit

What happened

Unified Payments Interface (UPI) · Government clarified that peer-to-peer UPI transfers remain free at any value. A 0.4% MDR will apply to specified merchant

Key facts

  • Rs 2,000
  • 0.4% MDR
  • Rs 1 lakh per month
  • 96% of merchant transactions
  • Rs 22,000 crore

Why this matters

Payment providers and retail platforms should assess partnerships or pricing models around higher-value eligible UPI flows, where MDR economics may create new revenue-pool opportunities.

What to watch

  • Publication of formal government, NPCI, RBI, or acquiring-bank guidance defining 'specified merchant payments' and eligible merchant categories.
  • Confirmation of whether the ₹1 lakh monthly QR-merchant exemption is assessed per QR, outlet, merchant ID, legal entity, or acquiring relationship.
  • Acquirer and payment-aggregator notices on MDR invoicing, GST, transaction exclusions, and merchant onboarding changes.
  • Evidence of retailers introducing UPI transaction caps, payment-method discounts, or card/EMI incentives for baskets above ₹2,000.
  • Merchant association responses or requests for rollback, broader exemptions, or category-specific relief.
  • Changes in UPI merchant transaction mix, average ticket size, and card share after October 15.
  • Map UPI payment flows by merchant entity, category, monthly QR receipts, and ticket size to identify transactions potentially above both the ₹2,000 threshold and exemption limits.
  • Obtain written confirmation from acquirers, PSPs, and payment aggregators on covered merchant categories, MDR calculation, GST treatment, settlement timing, and effective-date implementation.
  • Model margin impact by store format and category; prioritize electronics, jewellery, travel-like services, premium grocery, and other high-average-ticket businesses if covered.
  • Review checkout payment routing, promotional funding, and tender mix strategy for high-ticket baskets without introducing customer-facing friction.
  • Update merchant agreements, finance controls, and reconciliation systems to separately capture any new UPI MDR charges from October 15.