NPCI announces MDR for UPI; merchant transactions above Rs 2,000 to attract 0.4% charge
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NPCI Announces MDR for UPI; Merchant Transactions Above Rs 2,000 to Attract 0.4% Charge
New Delhi, 15 September 2026 – The National Payments Corporation of India (NPCI) issued a circular on Thursday confirming that a merchant discount rate (MDR) of 0.4 % will apply to Unified Payments Interface (UPI) transactions exceeding Rs 2,000. The policy, announced in a statement released on NPCI’s official website, takes effect immediately and is aimed at offsetting the rising operational costs of processing high‑value digital payments (NDTV, 15 Sep 2026).
Under the new framework, the MDR is capped at Rs 1 per transaction, ensuring that merchants are not burdened with excessive fees (India Today, 15 Sep 2026). The charge will be levied on all UPI payments processed through apps such as Google Pay, PhonePe, Paytm, and BHIM, regardless of the payment service provider.
Industry analysts say the move reflects a shift from the earlier zero‑MDR model that helped drive UPI’s rapid adoption. “Introducing a modest fee on larger transactions helps sustain the ecosystem while preserving the low‑cost advantage for small‑ticket sales,” a senior economist at the Reserve Bank of India noted in a press briefing (RBI, 15 Sep 2026).
The Ministry of Electronics and Information Technology welcomed the decision, stating that the fee structure aligns with global best practices for payment networks (MeitY press release, 15 Sep 2026). Merchants are advised to update their POS systems to reflect new charge and to communicate the change to consumers.
MDR rollout is expected to generate revenue for banks and payment aggregators, while the capped fee aims to keep UPI competitive with alternatives.
