UPI 0.4% MDR Kicks in October 15: Who Pays, Who's Exempt, and Why Your Kirana Bill May Still Rise
The National Payments Corporation of India (NPCI) has introduced a 0.4% Merchant Discount Rate (MDR) on person-to-merchant UPI payments above ₹2,000, effective October 15, 2026. The fee is capped at ₹300 for transactions of ₹75,000 and above. Person-to-person transfers remain free, and small merchants receiving up to ₹1 lakh a month through UPI QR codes stay exempt. The Finance Ministry notified on September 14–15 that banks cannot charge users on UPI transactions up to ₹2,000 or on RuPay debit-card payments. NPCI then announced the MDR framework. Essential sectors — fuel, railways, telecom, insurance, agriculture inputs — will pay a flat ₹5 per transaction above ₹2,000. Payments for mutual funds, securities, stock brokers and dealers attract a reduced MDR of 0.02%, capped at ₹300. Officials have been categorical: the customer will not be charged. The Ministry of Finance said banks have been advised to ensure merchants do not pass on the MDR to customers. But the post that triggered
