GENERAL16 Sept 2026
Who has to pay MDR on UPI and who stands to gain the most? | Explained
From October 15, 2026, NPCI allows a merchant discount rate (MDR) on some UPI payments. Mid and large merchants taking UPI above ₹2,000 per transaction will pay 0.4%, capped at ₹300. Essential sectors like railways, fuel and telecom pay a flat ₹5, while capital market payments pay 0.02%. The Finance Ministry says banks must ensure merchants don't pass this cost to you.
Key Statutory Highlights
- NPCI has released its circular allowing charges on certain UPI payments from October 15, 2026, and the MDR is paid by merchants, not consumers.
- Mid- to large-sized merchants receiving UPI payments above ₹2,000 per transaction will pay 0.4%, capped at ₹300 for transactions of ₹75,000 and above.
- Transactions of ₹2,000 or more in essential and thin-margin sectors such as railways, telecommunications, insurance, fuel and agricultural inputs will attract a flat ₹5 per transaction.
Actionable Advice for Taxpayers / Founders:If your business accepts UPI payments, check whether you fall in the above ₹2,000 per transaction group and factor the 0.4% MDR into your pricing. Since the Finance Ministry has advised banks to ensure merchants do not pass the charge to customers, confirm with your bank or payment provider what applies to you before October 15, 2026.
Statutory Disclaimer: TaxQue Shorts are AI-assisted editorial briefs for compliance awareness. This brief has not passed every source check; confirm the original notification before acting. This does not constitute formal legal or CA counsel.
TaxQue News Desk
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