UPI Charges 2026: MDR Rules, UPI Limits & FAQs Explained

As per an official NPCI press release announced on 15th September, 2026, a MDR of 0.4% will be introduced on Person-to-Merchant (P2M) UPI transactions above ₹2,000. For transactions below ₹2000, there are no MDR charges, presently. Read on to know the complete details about the newly levied UPI charges for merchants and how these new UPI fees affect normal consumers as well as answers to your commonly asked questions related to UPI fees and charges.

UPI will be charged a 0.4% MDR for P2M (Person to Merchant) transactions for amounts above Rs.2000. The maximum MDR capped per transaction is ₹300. These UPI charges are decided by the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI) and will come into effect from 15th October 2026.

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India sees billions of UPI transactions every month. These UPI transactions had zero MDR charges for over 6 years until recently on September 15th 2026 when NPCI announced that all P2M transactions will be charged 0.4% MDR fees. MDR is a Merchant Discount Rate that merchants or businesses need to pay to banks and payment service providers for processing the UPI payment. NPCI says that this cost will help them invest into the UPI infrastructure, innovation, cybersecurity and customer service.

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The new UPI charges applicable date is 15th October. This means, the new 0.4% UPI MDR fee will begin to be levied from 15th October 2026 onwards.

Also read: Difference between UPI, RTGS, IMPS, and NEFT: Charges & Limit

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• 0.4% MDR fee on P2M transactions above ₹2000 amount

• 0.4% MDR fee for P2M transactions are capped to ₹300 per transaction

• Railways, telecom services, insurance, and fuel are some categories that have a flat MDR fee of Rs.5 instead of a percentage.

• Mutual Funds, Securities, Stockbrokers, and Dealers have an UPI MDR fees of 0.02% of the transaction value with a maximum capping of ₹300

• For small vendors and merchants receiving payments directly in their own personal bank account will have zero UPI MDR fees for amount upto ₹100,000 per month

UPI is free for all person to person transactions and for all transactions under ₹2000. For person to merchant (P2M) UPI transactions, there’s a MDR fee of 0.4% which is charged to the merchants. For consumers, UPI remains free, at least on paper. On ground, merchants and businesses may pass on this 0.4% fee to the customers at the end. Though we are still yet to see this happen.

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There’s 0.4% charge capped to max ₹300 per transaction. For example, a P2M UPI transaction of ₹50,000 will have a ₹200 (0.4%) charge that needs to be paid by the merchant.

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On paper, UPI remains free for the most part. However, ground reality may differ. Similar to the case of RuPay credit cards, shopkeepers and businesses may start passing on the MDR charges and fees to the customers at the end or simply stop accepting UPI payments for transactions above ₹2000. We have seen this happen previously in the case of Rupay credit card which has a MDR charge ranging from 1.1% to 2%. Though only time can tell whether India’s homegrown payment tech UPI remains free or not.

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No, as per the official NPCI press release dated 15th Sept 2026, UPI MDR fees do not apply on autopay mandates.

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The Merchant Discount Rate (MDR) for Capital Market transactions, including payments towards Mutual Funds, Securities, Stockbrokers, and Dealers, is set at 0.02% of the transaction value with a maximum capping of ₹300.

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For specific merchant categories such as railways, telecom services, insurance, and fuel, among others, a flat MDR of Rs.5 per transaction shall be applicable for transactions above Rs.2,000. Rather than applying a 0.4% variable rate, these specific sectors pay a fixed fee of ₹5 regardless of the transaction amount.

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As per the official NPCI press release, scanning QR codes at local markets, street vendors, or small retail shops will remain completely free for consumers regardless of the amount. For small vendors, receiving payments through Person-to-Person-Merchant (P2PM) payments directly into their own personal bank accounts will have zero-MDR for receiving up to ₹1 lakh amount per month through UPI QR code.

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UPI apps have 1 Lakh daily UPI limit. However banks have their own specified UPI limit. For example, SBI allows upto 1 Lakh daily UPI limit while the Abhyudaya Co-Operative Bank has ₹25,000 daily limit for UPI.

Ever since UPI first launched in 2016, it has grown 13000 times going from 1.78 crore transactions in FY2016 - 2017 to over 24,162 crore transactions in FY2025 - 2026. UPI has become a part of our day to day lives and one of the strongest pillars for the growth of our digital economy and banking. With the announcement of new charges and MDR fees on UPI in 2026, it would be interesting to see how consumers and businesses respond to the new UPI change. 

Source:

NPCI Official PR - Aug 2026 - UPI Completes 10 Years of Digital Payments Revolution

Merchant Discount Rate (MDR) on Select UPI (P2M) Transactions