Story perspectives

NPCI Sets 0.4% MDR on UPI Payments Above INR2,000

By Drooid · Sep 15, 2026, 4:04 PM UTC · How we work

Summary

NPCI Implements 0.4% MDR

NPCI will charge a 0.4% merchant discount rate on UPI payments above Rs 2,000 starting October 15 2026.
Small P2PM merchants earning up to Rs 1 lakh monthly will continue paying zero MDR.
Payments up to Rs 2,000 and all person-to-person transfers remain free of charge.
NPCI estimates a 0.4% MDR could generate up to Rs 16,000 crore annually.
MDR caps at Rs 300 per transaction once payments exceed Rs 75,000.

Summary

Sitharaman Guarantees Free UPI

A poll found 12% would keep using UPI for >Rs 3,000 payments if a fee were imposed.
Willingness falls to 2% when merchants pass the fee to customers.
Finance Minister Nirmala Sitharaman told Parliament consumers will continue making UPI payments free of charge.
The 2026 amendment bill removed exemption for businesses over Rs 50 crore from Section 269SU.
UPI operators warned security costs exceed 20% of expenses and could rise with AI-driven fraud defenses.

History

Historical Context

After the EU ended Visa’s fee exemption in December 2007 and launched antitrust actions in 2007-2008, the European Parliament voted in March 2015 to cap interchange fees at 0.3 % for credit cards and 0.2 % for debit cards, a measure the Commission said could save €2 billion annually. India’s NPCI now proposes a 0.4 % rate above INR2,000, potentially adding INR16,000 crore each year.

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NPCI Implements 0.4% MDR

NPCI will charge a 0.4% merchant discount rate on UPI payments above Rs 2,000 starting October 15 2026.
Small P2PM merchants earning up to Rs 1 lakh monthly will continue paying zero MDR.
Payments up to Rs 2,000 and all person-to-person transfers remain free of charge.
NPCI estimates a 0.4% MDR could generate up to Rs 16,000 crore annually.
MDR caps at Rs 300 per transaction once payments exceed Rs 75,000.

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