MDR on UPI: What stays free, what attracts Rs 5 flat fee, and what 0.4% rate?
Times of India 1 hr ago·16 Sept 2026, 6:44 am
The Reserve Bank of India has introduced a new Merchant Discount Rate (MDR) structure for UPI transactions, effective October 15. The policy aims to balance the costs of digital payments between merchants and banks. Under the new rules, merchants will pay a flat fee of Rs 5 for transactions above Rs 2,000, while smaller transactions will incur a 0.4% charge. However, the government has exempted UPI transactions between individuals, including peer-to-peer transfers, from any fees.
This move is significant for the broader market as it aims to reduce the cost burden on small merchants while maintaining the free flow of digital payments. The exemption for person-to-person transfers is expected to encourage continued adoption of UPI. Investors should monitor how this policy impacts the profitability of payment aggregators and banks, as well as the overall volume of digital transactions in the economy.
Key takeaways
- Category: Economy.
- Flagged as a high-impact, market-moving story.
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