The National Payments Corporation of India (NPCI) has introduced a charge of 0.4% that most merchants will have to pay banks and payment processors on UPI payments they receive in excess of Rs.2,000 per transaction, it said in a circular issued on 15 September 2026.

• The charge, or Merchant Discount Rate (MDR), will not be applicable to person-to-person UPI transactions and UPI transactions to small vendors. All person-to-merchant transactions of up to Rs.2,000 done on UPI or through RuPay debit cards will also be exempt. In some sectors, such as Railways, telecom, insurance, fuel and agriculture inputs, transactions over Rs.2,000 will incur a flat MDR of Rs.5. There are no monthly quotas, volume limits, or tiered caps on free UPI transactions for individuals.

• The MDR framework has been introduced under the Payment and Settlement Systems Act, 2007, following detailed deliberations by the UPI Steering Committee on the applicable rates, operational arrangements and consumer safeguards.