Changes to UPI rules regarding commissions will take effect on October 15. It is important to know who bears the costs, what changes will occur for UPI payments, and who exactly will pay the new commission.
Starting from October 15, 2026, certain merchants will be required to pay MDR for some UPI payments exceeding the amount of 2000 rupees. This commission is borne by the merchant, not the end-user.
MDR (Merchant Discount Rate) is a fee charged to eligible merchants for accepting certain UPI payments. The standard MDR starting October 15 will be 0.4% for payments from eligible merchants exceeding 2000 rupees.
Peer-to-peer (P2P) payments remain completely free regardless of the amount, and no new monthly limits or quotas for free use are introduced for private individuals.
The new MDR applies to standard peer-to-merchant (P2M) payments. For amounts above 2000 rupees, an MDR of 0.4% will apply. For transactions of 75,000 rupees or more, the MDR is capped at 300 rupees.
For essential services such as fuel, railways, telecommunications, insurance, and utilities, the MDR is a fixed amount of 5 rupees for relevant payments exceeding 2000 rupees. Regarding mutual funds, securities, brokers, and dealers, the MDR rate is 0.02%, with a limit of 300 rupees.
Small merchants receiving up to 100,000 rupees per month via UPI QR code continue to benefit from zero MDR. However, if they exceed this amount for three consecutive months, they transition to the regular P2M category.
It is important to emphasize that the merchant pays the commission, not the customer. Banks have been advised to ensure that merchants do not pass the MDR onto buyers. Furthermore, UPI applications are prohibited from imposing platform fees or hidden charges within this system.
The UPI system is large and requires operational costs. The new structure is intended to support the development of payment infrastructure, cybersecurity, fraud prevention, innovation, and customer service.
