UPI MDR Charges 2026: Who Pays, How Much and From When
UPI stays free for you, whether you send money to a friend or pay a shop. A 0.4% merchant discount rate (MDR) will apply only to some shop payments above ₹2,000, the shop pays it, and NPCI says it starts just after Diwali on a date still to be announced.
What changed
When: Just after Diwali 2026. NPCI will notify the exact date separately (notice of 13 Oct 2026).
| Before | Now |
|---|---|
| Sending money to a person (P2P) | |
| Free | Free, for any amount |
| Paying a shop up to ₹2,000 | |
| No MDR | No MDR. Still free |
| Small merchants getting up to ₹1 lakh a month on UPI QR codes | |
| No MDR | Zero MDR on every payment, as before |
| Paying a shop above ₹2,000 | |
| No MDR | 0.4% MDR, paid by the shop. Capped at ₹300 for payments of ₹75,000 and above |
| Railways, telecom, insurance, fuel and farm inputs above ₹2,000 | |
| No MDR | Flat ₹5 MDR per payment, paid by the shop |
| Mutual funds, shares and stock brokers | |
| No MDR | 0.02% MDR, capped at ₹300 per payment |
Is there a charge on UPI payments now?
No. The new MDR has not started yet. Sending money to friends and family is free for any amount. Paying a shop up to ₹2,000 is free too. The Ministry of Finance said on 15 September 2026 that customers will not pay any MDR or platform fee.
Some news reports said the charge began on 15 October. The official notice says otherwise. On 13 October 2026 NPCI announced that, keeping the festive season in mind, MDR on select shop payments will start immediately after Diwali, on a date to be notified separately.
Who pays the 0.4% charge on UPI?
The shop pays, not you. MDR means merchant discount rate. It is a fee inside the payment chain, shared between banks, payment service providers and UPI apps. The Government says it is not a tax, and neither the Government nor NPCI collects it.
Banks have been told to make sure shops do not pass MDR on to customers, and UPI apps cannot add a platform fee or hidden charge. If a shop asks you to pay extra for UPI, raise it with your bank or UPI app.
Which UPI payments will attract MDR?
Only some shop payments (person to merchant, or P2M) above ₹2,000.
- Most shop payments above ₹2,000: 0.4%. A ₹10,000 payment means ₹40 MDR, paid by the shop. From ₹75,000 upwards the MDR is capped at ₹300.
- Railways, telecom, insurance, fuel and farm inputs above ₹2,000: a flat ₹5 per payment.
- Mutual funds, shares, stock brokers and dealers: 0.02%, capped at ₹300 per payment.
Do small shops and street vendors have to pay MDR?
Small merchants, including street vendors, who receive up to ₹1 lakh a month through UPI QR codes under the Person to Person Merchant (P2PM) category keep zero MDR on every payment. Ask your bank or payment app which category your QR code is in.
The Government says only about 4% of shop payments will be affected. The other 96% are ₹2,000 or less, or go to small merchants under the zero MDR framework.
What should a shop or café owner do before MDR starts?
If you run a retail shop, a restaurant or a grocery store, work out how many of your UPI payments are above ₹2,000. Those are the ones that may carry MDR.
Banks and payment apps usually ask a new merchant for papers such as Udyam registration and GST registration. They are separate from UPI, but keep them ready.
Frequently asked questions
Is UPI free for customers?
Yes. Customers pay no MDR and no platform fee. Payments to friends and family are free for any amount, and shop payments up to ₹2,000 are free too.
How much MDR will a shop pay on a ₹10,000 UPI payment?
0.4% of ₹10,000 is ₹40, if the payment is in the 0.4% group. A fuel or insurance payment above ₹2,000 attracts a flat ₹5 instead. Small merchants under the zero MDR framework pay nothing.
UPI par charge kitna lagega?
Aapko kuch nahi lagega. Dost ko paise bhejna free hai aur dukaan par ₹2,000 tak ka payment bhi free hai. ₹2,000 se upar ke kuch dukaan payments par dukaandaar ko 0.4% MDR dena hoga, ₹300 tak. Yeh Diwali ke turant baad shuru hoga, tareekh NPCI baad mein batayega.
Short summary in Hinglish
UPI customers ke liye free hai. Dost ko paise bhejna free hai aur dukaan par ₹2,000 tak ka payment bhi free hai. ₹2,000 se upar ke kuch dukaan payments par dukaandaar ko 0.4% MDR dena hoga (₹300 tak), customer ko nahi. Shuruaat Diwali ke turant baad hogi, tareekh NPCI baad mein batayega. Dukaan chalate hain to apne bank se poochhein ki aapka QR small merchant category mein hai ya nahi.
