UPI MDR charges are set to apply to selected merchant transactions from October 15, 2026, under a new framework.
The changes cover certain payments above ₹2,000, while person-to-person UPI transfers will continue to remain free.
UPI MDR Charges on 5 Payment Categories
Five categories have been placed under a separate flat-rate MDR structure.
These include railway ticket bookings, insurance payments, fuel transactions, telecom services and selected utility payments.
For transactions above ₹2,000 in these categories, a flat ₹5 MDR will apply instead of the standard percentage-based MDR.
The charge is a merchant-side fee and is not intended to be an additional charge collected directly from customers.
The new structure is part of changes to UPI’s merchant payment framework.
The standard MDR for specified merchant transactions above ₹2,000 has been set at 0.4%, subject to a maximum cap of ₹300.
Railway Tickets and Insurance Payments
Railway ticket bookings and insurance premium payments are among the categories covered by the flat ₹5 MDR structure for eligible transactions above ₹2,000.
This means the MDR treatment for these payments will differ from the standard 0.4% rate. The same flat-rate approach also covers fuel and telecom-related transactions.
UPI Payments That Will Stay Free
The new framework does not introduce charges for person-to-person UPI transfers. Sending money to friends or family will continue to remain free, irrespective of the transaction amount.
Payments to merchants up to ₹2,000 will also remain free, along with transactions covered under the existing zero-MDR framework for small merchants.
The Finance Ministry said around 96% of person-to-merchant UPI transactions will remain unaffected.
The MDR is not a government tax. It is distributed among participants in the payment ecosystem, including banks and payment application providers, to support the operation and expansion of UPI infrastructure.
For users, the key change is therefore focused on selected higher-value merchant payments.
Whether merchants pass any part of the cost to customers will depend on how individual services implement the new framework.
