UPI MDR Charges 2026: Proposed Fee Deferred Until Diwali
UPI Payment News: The proposed Merchant Discount Rate (MDR) charge on certain high-value UPI transactions has reportedly been deferred until Diwali. According to the information provided, the proposal involves a 0.4% MDR fee on eligible merchant transactions exceeding ₹2,000. The exact implementation date has not yet been announced.
The reported decision is attributed to the National Payments Corporation of India (NPCI), with the festive season cited as a consideration. However, the final implementation timeline and detailed terms require confirmation through an official notification.
The proposal has drawn attention because UPI is widely used by consumers and businesses across India for everyday digital payments.
What Is MDR in UPI Payments?
MDR stands for Merchant Discount Rate. It is a fee associated with accepting digital payments, generally paid by merchants to banks or payment service providers.
Under the reported proposal, the MDR charge would apply to eligible merchants rather than being directly imposed on customers making ordinary person-to-person UPI transfers.
The applicable rate, exemptions and transaction categories would depend on the final rules announced by the relevant authorities.
Key Details of the Proposed UPI MDR Charges
The information provided outlines the following proposed provisions:
1. Proposed 0.4% MDR on Transactions Above ₹2,000
Eligible large merchants could be charged an MDR of 0.4% on qualifying UPI transactions exceeding ₹2,000. An additional 18% Goods and Services Tax (GST) may apply to the MDR amount, subject to the final rules.
2. Proposed Exemption for Small Merchants
The proposal reportedly includes an exemption for small merchants accepting up to ₹1 lakh in UPI payments per month. The eligibility criteria and final exemption conditions would need to be confirmed officially.
3. Separate Proposal for Transactions of ₹75,000 or More
The supplied information also refers to a proposed MDR amount of ₹300, plus applicable GST, for transactions of ₹75,000 or more. The precise scope and relationship of this provision to the other proposed rates require clarification in the final official guidelines.
4. Proposed ₹5 Charge in Certain Sectors
A separate charge of ₹5 has reportedly been proposed for eligible transactions above ₹2,000 in certain sectors, including petrol pumps, railways, telecommunications, insurance and bill payments.
This provision should be treated as a reported proposal until the relevant authorities confirm the applicable categories and conditions.
5. Transactions Up to ₹2,000
According to the supplied information, eligible merchant transactions up to ₹2,000 would not attract the proposed MDR charge. The final rules will determine the precise scope of this provision.
Will UPI Users Have to Pay Extra Charges?
The proposal described in the available information does not involve directly charging customers for ordinary person-to-person UPI transfers.
However, a merchant-side fee could affect the cost of accepting digital payments for businesses if implemented. Whether any merchant changes prices or introduces other payment-related conditions would depend on the final rules and individual business practices.
Consumers should not assume that an additional charge has already come into effect based solely on the reported proposal.
Government Spending on UPI Promotion
According to the information provided, the government spent ₹8,276 crore under UPI incentive schemes between the financial years 2021–22 and 2024–25.
These incentives have supported the promotion of digital payments. The proposed MDR framework has renewed discussion about the costs of maintaining and expanding India’s digital payment ecosystem.
When Will the UPI MDR Charges Come Into Effect?
The proposed implementation has reportedly been deferred until Diwali, but a confirmed date for introducing the charges has not been provided in the source material.
Merchants and consumers should check official announcements from NPCI, the Reserve Bank of India (RBI) and the relevant government authorities for confirmed rules, eligibility criteria and implementation dates.
Until an official notification clarifies the proposal, the reported rates and exemptions should not be treated as universally applicable or already implemented.
What is your opinion on the proposed MDR charges for high-value UPI transactions? Share your views in the comments.
