NPCI sets 0.4% MDR on UPI payments above Rs 2,000 from Oct 15

The National Payments Corporation of India has notified a 0.4% Merchant Discount Rate on person-to-merchant UPI transactions above Rs 2,000, effective from October 15, 2026. The MDR is capped at Rs 300 for transactions of Rs 75,000 and above. Transactions up to Rs 2,000 and all person-to-person payments remain free. The Times of India reports the move follows an amendment to the Payment and Settlement Systems Act passed in August, which created an enabling framework for MDR.

The NPCI's 22-member steering committee, including the Indian Banks' Association and Payments Council of India, decided on the rate after considering ecosystem sustainability and global benchmarks such as Brazil's 0.33% and China's 0.40% merchant charges. The government said only about 4% of merchant transactions exceed Rs 2,000, so small vendors remain unaffected. Congress leaders Rahul Gandhi and Jairam Ramesh criticised the move, alleging it paves the way for consumer fees and that the government is bowing to pressure from US payment firms, claims the finance minister has denied.