UPI Transactions Up to ₹2,000 to Remain Free Under New MDR Pricing Framework

UPI transactions will continue to be free for individual consumers, as per the guidelines set by the National Payments Corporation of India (NPCI) and supported by the Reserve Bank of India (RBI).  

The new Merchant Discount Rate (MDR) pricing framework, effective from October 15, 2026, ensures that more than 95% of routine digital transactions incur no charges. 

Free Everyday Transactions 

Person-to-Person (P2P) transfers remain free, allowing individuals to send money to others' personal bank accounts without any charges, regardless of the transaction amount. Self-account transfers, which involve moving money between one's own linked bank accounts, also carry no fees.  

Additionally, all merchant payments up to ₹2,000 are exempt from transaction fees, ensuring cost-free small transactions. 

Automated recurring payments, such as AutoPay and standing mandates for OTT subscriptions, insurance, or investments, are also free of charge, providing convenience without additional costs. 

Businesses and Vendors Exempt from Fees 

Small shopkeepers and street vendors earning up to ₹1 lakh per month via QR codes are not subject to MDR, allowing them to receive high-value payments without deductions.  

Low-value fuel and utility bill payments under ₹2,000 also face a 0% rate. 

Consumer Protection Safeguards 

Merchants are prohibited from passing any high-value ecosystem fees onto buyers, ensuring that consumers are not burdened with additional costs.  

Payment applications are strictly prohibited from adding extra fees, maintaining transparency in digital transactions. 

There are no monthly quotas or caps on the number of free transactions consumers can complete, allowing for unlimited usage of UPI services without incurring fees. 

Read More: UPI Payments for Mutual Funds, Stocks to Attract 0.02% MDR From October 15, 2026! 

Conclusion 

UPI transactions up to ₹2,000 remain free for individual consumers, with the new MDR framework ensuring over 95% of digital transactions face zero charges. Small merchants and vendors benefit from exemptions, and consumer protection measures prevent hidden fees. 

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.