Know the Merchant Discount Rate on UPI Transactions Above ₹2,000

Starting October 15, 2026, UPI transactions exceeding ₹2,000 will attract a Merchant Discount Rate (MDR), impacting merchants but not consumers.  

This charge is designed to be absorbed by commercial merchants, ensuring that individual consumers face no additional fees. 

Standard Commercial Transactions 

For standard commercial transactions, a nominal MDR of 0.4% will be applied to P2M transactions over ₹2,000.  

Purchases under ₹2,000 will remain free of MDR. For transactions of ₹75,000 and above, the fee is capped at ₹300.  

For example, a ₹3,000 transaction incurs a ₹12 fee, while a ₹50,000 transaction costs ₹200. Transactions of ₹1,00,000 are capped at ₹300, despite the raw percentage mapping to ₹400. 

Flat-Rate Industry Concessions 

Certain sectors will transition to a flat MDR of ₹5 per transaction for payments above ₹2,000. These include utilities such as government utility bills, core services like railways and telecom, financial retail including insurance premiums, fuel outlets, and education fees.  

This flat rate aims to support thin-margin sectors and critical public services. 

Capital Market Transactions 

Capital market transactions have a distinct pricing framework with a minimal tier rate. Fund transfers via UPI for mutual fund purchases, equity buying, and other investments are charged at 0.02% of the transaction value, with a maximum cap of ₹300.  

This ensures a controlled fee structure for regulated entities in capital markets. 

Categorised Exemptions 

Certain transactions remain exempt from MDR, even if they exceed ₹2,000. Person-to-Person (P2P) transactions, micro merchants receiving up to ₹1 lakh per month, and AutoPay mandates for recurring payments are all exempt.  

This framework isolates commercial merchant processing from daily public transactions. 

Read More: UPI Transactions Up to ₹2,000 to Remain Free Under New MDR Pricing Framework! 

Conclusion 

From October 15, 2026, UPI transactions above ₹2,000 will incur an MDR, with a 0.4% fee for standard transactions and a ₹5 flat rate for specific sectors. Capital market transactions are charged at 0.02%, with exemptions for P2P, micro merchants, and AutoPay mandates. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.