New 0.4% UPI MDR From October 15: What Customers and Merchants Need to Know
A new 0.4% MDR will apply to specified UPI merchant payments above ₹2,000 from October 15, 2026, but customers will not be charged the MDR separately.
Prasanth Subramani 
A new 0.4% Merchant Discount Rate (MDR) is set to apply to specified UPI payments made to merchants above ₹2,000 from October 15, 2026. The charge will be capped at ₹300 for transactions of ₹75,000 and above.
However, the MDR is not a tax imposed directly on customers. It is a charge within the merchant payment ecosystem, and customers should not be asked to pay the MDR separately. Person-to-person UPI transfers and merchant payments of up to ₹2,000 will continue to remain free under the stated changes.
According to the government, around 96% of merchant UPI transactions will remain unaffected by the new MDR provision. The change is therefore expected to apply only to specified higher-value merchant transactions, while regular UPI payments within the applicable limits will continue without an additional customer charge.
