National Payments Corporation of India (NPCI) will introduce new charges on UPI transactions from October 15, 2026. A 0.4% Merchant Discount Rate (MDR) will be applied to eligible merchant payments above Rs. 2,000. The charge will target larger commercial transactions and remain capped at Rs. 300.

The revised UPI charges will apply across India, while merchants will bear the MDR under the new framework. Railway tickets, fuel, insurance and selected utilities will instead carry a flat Rs. 5 MDR above Rs. 2,000. The structure separates large retail payments from essential services and small transactions. 

Person-to-person UPI payments are excluded from the MDR framework, regardless of transaction value. Transfers between friends and family will therefore be free. 

Merchant payments worth Rs. 2,000 or less will also remain free from MDR. Eligible small merchants under the Person-to-Person-Merchant (P2PM) category will retain zero MDR protection. The framework covers merchants receiving up to Rs. 1 lakh monthly through UPI QR payments. 

The new structure creates a different rule for essential services. Railway tickets, fuel purchases, insurance premiums, and selected utility payments above Rs. 2,000 will attract Rs. 5 MDR. Electricity, water and piped natural gas payments fall within the utility category. 

UPI AutoPay will also remain outside the prescribed MDR charges. Recurring payments for OTT subscriptions, utilities and other eligible mandates will continue without this transaction charge. This keeps automated recurring payments separate from standard merchant payments. 

The framework also introduces a separate rate for capital market transactions. Payments involving mutual funds, securities and registered brokers will attract 0.02% MDR, subject to a Rs. 300 maximum. 

The Finance Ministry said banks should ensure merchants do not pass MDR charges to customers. It also said UPI application providers cannot impose platform fees or hidden charges under the framework. 

The changes arrive as UPI manages massive transaction volumes across India. NPCI recorded 24.51 billion UPI transactions worth nearly Rs. 29.82 trillion during August 2026. 

The October framework therefore keeps everyday digital payments largely unchanged. Larger merchant payments will carry the new MDR, while P2P transfers and eligible recurring payments remain outside it.

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