NPCI will charge a 0.4% merchant discount rate on person-to-merchant UPI transactions above ₹2,000, effective October 15. The fee caps at ₹300 for payments of ₹75,000 and above.
Peer-to-peer transfers remain free. Small merchants collecting up to ₹1 lakh a month through UPI QR codes under the P2PM category pay zero MDR on all transactions, regardless of size.
The Ministry of Finance says the framework touches about 4% of merchant transactions. The remaining 96% stay untouched, either falling below the ₹2,000 threshold or qualifying for the zero-MDR small-merchant carveout. Railways, telecom, insurance and fuel merchants pay a flat ₹5 fee on payments above ₹2,000 instead of the percentage rate. Capital market transactions, covering mutual funds, stockbrokers, securities dealers and investment platforms, draw a lower 0.02% rate capped at ₹300.
Two estimates, one rate, no agreement
The 0.4% figure matches what Business Today and Free Press Journal had flagged as the likely outcome of deliberations by NPCI’s 22-member UPI and Services Steering Committee, chaired by MD and CEO Dilip Asbe with Executive Director for Growth Sohini Rajola.
The revenue estimates built on that single rate diverge sharply. Forbes India cites industry projections of ₹3,500-5,000 crore a year in new ecosystem revenue. Gujarat Samachar’s English edition puts the figure at ₹5,000-10,000 crore annually, roughly double at the high end. Both estimates sit against Forbes India’s separate figure: running UPI costs the ecosystem around ₹20,000 crore a year, split between banks, NPCI and payment service providers. That gap is what the MDR is meant to help close.
The charge did not exist as a legal option until Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026, amending the Payment and Settlement Systems Act to permit UPI charges, according to Forbes India. The move traces back to an earlier notification that laid the groundwork for the amendment.
The rate takes effect October 15, with the ₹300 cap kicking in at the ₹75,000 payment mark and the flat ₹5 fee applying to railways, telecom, insurance and fuel transactions above ₹2,000.
Sources
- Business Today: reported the expected 0.4% MDR rate ahead of the announcement
- Free Press Journal: corroborated the anticipated MDR figure
- Forbes India: reported industry revenue projections, the ₹20,000 crore ecosystem cost estimate, and the legislative background
- Gujarat Samachar (English edition): reported a higher revenue projection range
Reporting compiled and contextualised by TechScoop India. Figures reconciled across the sources above.
Originally reported by Inc42.