Merchants to pay 0.4% MDR on UPI P2M above ₹2,000
UPI payments are getting a tweak: starting October 15, 2026, new Merchant Discount Rate (MDR) fees will kick in for eligible Person-to-Merchant (P2M) payments above ₹2,000.
If you pay over ₹2,000 at a shop or online store, the merchant, not you, will pay an MDR of 0.4%.
This move is all about updating how merchants are charged on UPI.
Most merchant transactions remain unaffected
Do not worry, most small purchases will not see any change. Approximately 96% of merchant transactions will remain unaffected, as they are either below the ₹2,000 threshold or covered by the zero-MDR framework for small merchants.
For a UPI payment of ₹75,000 or more, the MDR will be limited to ₹300 per transaction. Sectors like railways and telecom get a flat ₹5 fee for large payments. Mutual fund buys have their own tiny charge (0.02%, also capped).
And good news: sending money to friends or splitting bills remains totally free (P2P transfers are not touched by these changes).