UPI MDR charges from October 15 will apply to certain person-to-merchant payments above ₹2,000, with merchants required to pay the Merchant Discount Rate (MDR).
Customers will not be directly charged the MDR, according to the announced framework.
The standard MDR has been set at 0.4% for eligible merchant transactions above ₹2,000, with a maximum charge of ₹300 per transaction. Person-to-person UPI transfers will continue to remain free.
UPI MDR Charges From October 15
For a qualifying merchant payment of ₹10,000, a 0.4% MDR would amount to ₹40. The charge is intended to be paid by the merchant rather than added directly to the customer’s payment.
Certain sectors have a separate flat MDR structure. Fuel transactions above ₹2,000 are among the categories for which a ₹5 MDR applies instead of the standard 0.4% rate.
The new framework is scheduled to take effect from October 15, 2026. Payments of up to ₹2,000 to merchants will remain outside the standard MDR, while small merchants meeting the applicable conditions can also remain exempt.
Madhya Pradesh Petrol Pumps Plan UPI Restriction
The proposed MDR has led to concerns among petrol pump dealers in Madhya Pradesh. The Madhya Pradesh Petroleum Dealers Association has said that petrol pumps in the state plan to stop accepting UPI payments above ₹2,000 for fuel from October 15.
Reports say the decision covers around 4,700 petrol pumps across Madhya Pradesh. Dealers have sought exemption from the MDR, citing the impact of the additional payment-processing cost on their margins.
According to the statement provided for this report, Ajay Singh, president of the Madhya Pradesh Petrol Pump Dealers Association, said dealers had decided not to accept UPI payments above ₹2,000 if the MDR is not withdrawn. He also said the additional cost could be around ₹17,700 per month for a petrol pump.
Why Petrol Dealers Are Concerned
Petrol pump dealers operate with relatively low margins, and the association has argued that even a fixed ₹5 MDR on qualifying fuel transactions could add to their operating costs.
The Confederation of All India Traders has also expressed concern over the proposed restrictions by petrol pump dealers in Madhya Pradesh.
Dharmendra Sharma, president of CAIT’s Bhopal unit and media in-charge for Madhya Pradesh, linked the issue to the proposed MDR on high-value UPI merchant payments.
The UPI MDR charges from October 15 are therefore creating a debate among businesses that depend heavily on digital payments.
While the MDR is designed as a merchant-side charge, some petrol pump dealers are considering limiting UPI acceptance for transactions above ₹2,000.
Customers making high-value fuel purchases in affected locations may therefore need to check the payment options available at the petrol pump before making a transaction.
