Andhra King Taluka OTT Release: Ram Pothineni’s Action-Comedy Now Streaming on Netflix

 

UPI payments are set to change from October 15, 2026, with a new Merchant Discount Rate (MDR) applying to select high-value merchant transactions. However, ordinary users will continue to make UPI payments without paying a transaction fee.

The new framework applies mainly to Person-to-Merchant (P2M) UPI payments above ₹2,000. Here's what users and merchants need to know.

1. What Is the New UPI MDR?

From October 15, 2026, a 0.4% MDR will apply to eligible P2M UPI transactions above ₹2,000.

For example, if you pay a merchant ₹2,000, the MDR at 0.4% would be ₹8. The charge is a merchant-side fee rather than a new fee that consumers have to pay when making the UPI payment.

For transactions of ₹75,000 or more, the MDR will be capped at ₹300 per transaction. Payments below ₹2,000 will remain outside this MDR framework.

2. Will UPI Users Have to Pay the Fee?

For consumers, UPI will continue to remain free under the new framework.

The MDR applies to eligible merchant transactions, meaning the fee is charged within the merchant-side payment ecosystem rather than directly to the customer.

So, if you purchase something for ₹2,500 and pay through UPI, the merchant's MDR would be calculated on the eligible transaction. The merchant should not simply add the MDR as a separate UPI charge to the customer's bill.

3. What About Sending Money to Friends and Family?

Person-to-person (P2P) UPI transfers remain free.

If you send ₹5,000 to a friend, transfer money to a family member or move money between your own linked accounts, the new merchant MDR does not apply.

The change is focused on eligible person-to-merchant payments, rather than ordinary money transfers between individuals.

4. Are Small Merchants and Certain Payments Exempt?

The new framework includes exemptions and special MDR rates for different merchant categories.

According to the reported framework, merchants receiving up to ₹1 lakh per month through UPI QR codes will not be subject to the standard MDR. A single payment above ₹2,000 does not automatically make such a merchant liable for MDR.

Certain essential-service categories also have a different structure. Railways, telecom, insurance and fuel payments above ₹2,000 will attract a flat MDR of ₹5 per transaction. Electricity, water and piped natural gas payments above ₹2,000 will also have a ₹5 MDR.

Capital-market transactions involving areas such as mutual funds, securities and stockbrokers have a separate 0.02% MDR, subject to a ₹300 cap.

5. Why Is MDR Being Introduced?

The change is aimed at creating a more sustainable financial model for the rapidly expanding UPI ecosystem.

The Reserve Bank of India has backed the introduction of MDR on large-value UPI transactions, saying that an appropriate distribution of MDR across participants can support continued investment in technology, infrastructure and payment acceptance networks.

UPI has grown to enormous scale. NPCI's official statistics show that UPI processed about 24.51 billion transactions worth ₹29.82 lakh crore in August 2026.

The new MDR framework is therefore intended to support continued investment in areas such as infrastructure, innovation, cybersecurity and customer services.

What Changes for You From October 15?

For most everyday UPI users, very little changes immediately.

• P2P UPI transfers: No MDR
• Merchant payments up to ₹2,000: No MDR
• Eligible merchant payments above ₹2,000: 0.4% MDR
• Transactions of ₹75,000 or more: MDR capped at ₹300
• Consumers: No direct UPI transaction fee under the announced framework
• Small qualifying merchants: Exempt from standard MDR
• Certain essential services: Special ₹5 MDR structure

So, the headline that “UPI will become chargeable” needs some context. The new charge applies to specific merchant transactions, while consumers continue to have access to free UPI payments under the announced framework.