16/09/2026
UPI Rule Change: What's Changing?
The National Payments Corporation of India
(NPCI) has announced a new Merchant Discount Rate (MDR) framework for UPI transactions. From October 15, 2026, selected person-to-merchant (P2M) UPI payments above ₹2,000 will attract an MDR of 0.4%, capped at 300 per transaction. (Source :- Reuters) Importantly, this is not a direct charge on consumers. The MDR is payable within the merchant-payment ecosystem, and the government has said banks have been advised to ensure merchants do not pass the cost on to customers. Person-to-person (P2P) UPI
transfers will remain free. (Source :- Business Upturn)
Certain essential sectors-including railways, telecom, insurance and fuel-will have a flat 5 MDR for eligible transactions above ₹2,000. For general merchants, the 0.4% charge is capped at ₹300, including transactions of ₹75,000 or more. (Source:- Business Today.)
NPCI says the change is intended to support the long-term sustainability of the UPI
ecosystem, including infrastructure, innovation, cybersecurity and customer-service costs. UPI processed about 24 billion transactions worth $311 billion in August 2026 alone, highlighting the enormous scale of the system. (Source :-
Reuters)
Bottom line: UPI isn't becoming universally chargeable. The change specifically targets selected high-value merchant transactions, while ordinary consumer transfers remain free
