Centre to oversee UPI MDR charges daily from October 15
What's the story
The Indian government has announced that it will start monitoring the Merchant Discount Rate (MDR) for Unified Payments Interface (UPI) transactions on a daily basis, starting October 15. The move is aimed at ensuring banks and payment aggregators do not pass these charges onto consumers. The monitoring will focus on how banks and payment aggregators implement the new framework and whether merchants bear the charges as expected or if any part of the cost is transferred to consumers.
Framework specifics
New framework under UPI
Under the new framework, a 0.4% MDR will be levied on certain person-to-merchant (P2M) UPI transactions above ₹2,000 from October 15.
The charge will be capped at ₹300 for transactions of ₹75,000 and above. However, consumers won't have to pay this fee.
Person-to-person (P2P) transfers will continue to remain free regardless of transaction value.
P2M transactions up to ₹2,000, which account for over 95% of P2M volume, will also continue to attract zero MDR under the new rules.
Exemption details
Who will be exempt from the new fees?
Small merchants in the P2PM category, earning up to ₹1 lakh/month through UPI QR, will continue to be exempt from MDR.
Essential sectors such as railways, telecom, insurance, fuel, and agricultural inputs will attract a flat ₹5 MDR on transactions above ₹2,000.
A concessional MDR of 0.02% will apply on certain capital-market transactions involving securities, mutual funds, and stockbrokers with a cap of ₹300.
Transaction statistics
For FY26, UPI recorded 241.6 billion transactions
In FY26, India's UPI platform recorded 241.6 billion transactions worth ₹314.2 trillion, a 30% increase in volume and 21% in value from the previous year.
As of August 2026, UPI had over 55 crore users, according to National Payments Corporation of India (NPCI) data.
In August alone, it processed 24.5 billion transactions worth ₹29.8 trillion, 22% more by volume and 20% by value compared to last year.
Tax details
GST on UPI fees
A senior government official clarified that there is no separate goods and services tax (GST) on the underlying UPI transaction.
The existing GST framework will apply, with 18% GST levied on the MDR or fee charged on eligible transactions, not on the underlying transaction value.
Eligible GST-registered businesses can claim input tax credit on the paid GST, subject to applicable conditions, and set it off against their output tax liability.