UPI MDR explained: Flat ₹5, 0.40% or 0.02%? Know what applies to merchants, key sectors and capital markets
Mint 2 hrs ago·17 Sept 2026, 3:26 pm
The Reserve Bank of India (RBI) has proposed a new framework for UPI Merchant Discount Rate (MDR) charges, set to take effect from October 15, 2026. This move aims to balance the cost burden between merchants and consumers, replacing the current uniform rate. The proposed structure includes a flat fee of ₹5 per transaction, a 0.40% charge for transactions up to ₹2,000, and a 0.02% charge for transactions above ₹2,000. The final rates will depend on the merchant's category and the type of payment instrument used.
This policy shift is significant for the broader market as it directly impacts the cost of digital payments for businesses. For small merchants, the flat ₹5 fee could simplify accounting, while the tiered rates for higher-value transactions aim to prevent excessive costs. Investors should monitor how this affects the profitability of payment aggregators, fintech companies, and retail businesses that rely heavily on UPI. The implementation timeline also provides a window for the industry to adapt to the new norms.
Excerpt from Mint
UPI MDR rules are set to apply from 15 October 2026, with different charges based on transaction value, merchant category, and payment type. Here’s a look at how the framework works and what merchants and consumers need to know. The UPI Merchant Discount Rate (MDR) framework will take effect from 15 October 2026, with…Read the original at Mint
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