New UPI Transaction Rates 2026: Check Proposed MDR Fees, Caps and Exemptions
The new UPI framework sets zero MDR on transactions up to INR 2,000 and free P2P transfers. It introduces a structured 0.4 per cent MDR for larger payments, flat fees for essential sectors, and safeguards for small merchants. Banks have also been directed to ensure that merchants do not pass MDR charges directly onto consumers.
The National Payments Corporation of India (NPCI) and the Central Government have released a comprehensive framework detailing the proposed Merchant Discount Rate (MDR) structure for Unified Payments Interface (UPI) transactions, ensuring that everyday payments up to INR 2,000 and person-to-person transfers remain entirely free.
The guidelines stem from a recent government notification issued under the amended Payment and Settlement Systems (PSS) Act, 2007, which provides the legal foundation to balance affordability for consumers with financial sustainability for payment ecosystem partners, reports PIB. UPI Payments Beyond INR 2,000 May Attract Charges, NPCI Guidelines Soon: Report.
Proposed UPI Transaction Rates At a Glance
The newly established circular outlines specific fee caps, flat rates, and exemptions across different transaction categories for amounts exceeding INR 2,000:
| Transaction Category | Proposed MDR Rate / Fee | Special Conditions & Caps |
| Person-to-Person (P2P) | INR 0 (Free) | No charges regardless of transaction value |
| P2M (Standard above INR 2,000) | 0.4 per cent | Capped at INR 300 for high-value transactions of INR 75,000 and above |
| Essential Sectors (Railways, Telecom, Insurance, Fuel, Agri-inputs) | Flat INR 5 per transaction | Applies to amounts above INR 2,000 |
| Capital Markets (Mutual Funds, Brokers, Securities) | 0.02 per cent | Capped at INR 300 |
| Small Vendors (P2PM) | INR 0 (Free) | For merchants receiving up to INR 1 lakh per month via QR codes |
Protecting Consumers and Micro-Vendors
Under the new operational parameters, individual users face zero platform fees, hidden charges, or monthly quotas. Banks have also been directed to ensure that merchants do not pass MDR charges directly onto consumers. Data indicates that micro and small businesses will remain heavily shielded, with only 4 per cent of total merchant transactions impacted by the introduction of MDR. Furthermore, small vendors qualifying under the P2PM classification receiving up to INR 1 lakh monthly continue to enjoy mandatory zero-MDR benefits. UPI Charges: No Fees on Transactions up to INR 2,000, RuPay Debit Cards, Says Government.
Building Ecosystem Sustainability
To support broader adoption, 5 per cent of total MDR collections will be channelled into a dedicated infrastructure development fund designed to expand UPI acceptance in semi-urban and rural regions. This structural update aligns with recommendations from the Standing Committee on Finance, which previously emphasised that establishing a viable revenue mechanism is critical to ensuring the long-term financial health and competitiveness of India’s digital payments infrastructure.
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(The above story first appeared on LatestLY on Sep 15, 2026 07:31 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
