UPI Remains Free for Consumers as New MDR Rules Target Select Merchant Transactions
UPI transactions will remain entirely free for everyday consumers, as the Finance Ministry and NPCI have clarified following recent rule adjustments.
Starting October 15, 2026, a 0.4% Merchant Discount Rate (MDR) will apply strictly to specified Person-to-Merchant (P2M) transactions exceeding ₹2,000, with the fee capped at ₹300. Crucially, this cost is borne entirely by the merchants and cannot be passed on to customers.
Furthermore, all Person-to-Person (P2P) transfers and merchant transactions up to ₹2,000 remain completely free. Essential services like railways, fuel, and telecom will instead attract a minor flat fee of ₹5 for transactions over ₹2,000. This development comes as digital payments continue to reshape the travel and tourism payment ecosystem, with UPI expanding its international footprint and supporting easier payments for Indian travellers.
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