UPI MDR Charges: When do the provisions take effect? How does it compare with international payment systems?
Mint 6 hrs ago·6 Oct 2026, 8:43 am
The Reserve Bank of India (RBI) has announced a phased reduction in the Merchant Discount Rate (MDR) for UPI transactions. This new framework will be implemented in two stages, beginning on October 15, 2026. During the first phase, a 0.4% fee will be levied on UPI merchant transactions exceeding ₹2,000. This rate will be capped at ₹300 for high-value transactions of ₹75,000 or more. The second phase, set to begin on April 1, 2027, will introduce a 0.3% fee for transactions above ₹2,000, with a cap of ₹200 for those over ₹75,000.
This move is significant for the broader market as it aims to promote the continued adoption of digital payments in India. By lowering transaction costs, the central bank hopes to encourage more businesses to accept UPI, thereby strengthening the digital economy. The policy also differentiates between consumer-to-consumer (P2P) transfers, which will remain free, and merchant payments. This approach is distinct from international models, where digital payment fees are often higher or structured differently, making India’s strategy a unique experiment in financial inclusion.
Excerpt from Mint
From 15 October 2026, a 0.4% MDR will apply to specified UPI merchant transactions above ₹ 2,000, capped at ₹ 300 for transactions of ₹ 75,000 and above. Consumers and P2P payments remain free, while India’s model differs from digital-payment fee structures in other countries. India’s Unified Payments Interface (UPI)…Read the original at Mint
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