New UPI Rules From October 15, 2026: Check New Charges and Complete Fee Structure
The Unified Payments Interface (UPI) is set to undergo an important change from October 15, 2026, with a new Merchant Discount Rate (MDR) framework coming into effect for certain merchant transactions. However, the new rules do not mean that ordinary UPI users will suddenly have to pay a fee every time they make a digital payment.
Under the revised framework, person-to-person (P2P) UPI transfers will continue to remain free, irrespective of the amount. Payments made to merchants up to ₹2,000 will also remain free of MDR. The new charge will apply only to specified person-to-merchant (P2M) transactions above ₹2,000.
For transactions of ₹75,000 or more, the 0.4% MDR will be capped at ₹300 per transaction.
For example, if a customer makes a ₹10,000 UPI payment to an eligible merchant, the applicable MDR would be ₹40. The customer would still pay ₹10,000, while the merchant bears the MDR.
The government has clarified that UPI will continue to remain free for consumers. Banks have also been advised to ensure that merchants do not pass the MDR on to customers as an additional UPI charge.
This means sending money to a friend or family member through UPI will continue to be free, even when the transaction amount is above ₹2,000.
The government has said that around 96% of P2M transactions will remain unaffected by the new MDR framework .
UPI transactions above ₹2,000 involving sectors such as railways, telecommunications, insurance, fuel and agricultural inputs will attract a flat ₹5 MDR. This structure is intended to provide greater predictability for sectors where margins can be relatively narrow.
Certain other essential-service categories, including specified utility and educational transactions, have also been reported under the flat-fee framework.
Payments relating to mutual funds, securities, stockbrokers and dealers will attract an MDR of 0.02%, subject to a maximum cap of ₹300 per transaction.
This lower rate is designed to avoid placing a significant additional cost on digital payments connected with financial-market participation.
Merchants receiving up to ₹1 lakh per month through UPI QR codes under the qualifying P2PM framework will continue to enjoy zero MDR. This means many neighbourhood shops, street vendors and other small businesses will not face the new charge.
The exemption is intended to prevent additional payment costs from affecting smaller businesses that rely heavily on UPI for everyday transactions.
This means recurring payments such as certain utility bills, subscriptions, SIPs and similar pre-authorised debits will continue under the applicable existing framework without the new 0.4% MDR. One-time merchant payments above ₹2,000, however, can fall under the new MDR rules depending on the category.
The ₹2,000 figure is an MDR threshold and does not mean that UPI transactions are being limited to ₹2,000.
Users can continue to make larger UPI payments where the existing transaction limits and banking rules allow them. The new framework determines whether a merchant-side MDR applies to a particular transaction.
Sending money to friends or family will remain free. Small merchant payments up to ₹2,000 will also remain free. The new MDR mainly affects eligible merchants receiving higher-value payments through UPI.
The government has said the framework is intended to support the long-term sustainability of the UPI ecosystem, including investment in infrastructure, cybersecurity and innovation.
Therefore, the headline around "UPI charges" should not be interpreted as a blanket fee on consumers. The October 15 changes primarily introduce a merchant-side MDR for specified higher-value transactions.
Under the revised framework, person-to-person (P2P) UPI transfers will continue to remain free, irrespective of the amount. Payments made to merchants up to ₹2,000 will also remain free of MDR. The new charge will apply only to specified person-to-merchant (P2M) transactions above ₹2,000.
What Are the New UPI Rules From October 15?
From October 15, eligible merchant UPI transactions above ₹2,000 will attract a Merchant Discount Rate of 0.4%. This is a charge within the payment ecosystem and is applicable to merchants rather than customers.For transactions of ₹75,000 or more, the 0.4% MDR will be capped at ₹300 per transaction.
For example, if a customer makes a ₹10,000 UPI payment to an eligible merchant, the applicable MDR would be ₹40. The customer would still pay ₹10,000, while the merchant bears the MDR.
Will Customers Have to Pay UPI Charges?
No. Customers are not supposed to pay the new MDR separately.The government has clarified that UPI will continue to remain free for consumers. Banks have also been advised to ensure that merchants do not pass the MDR on to customers as an additional UPI charge.
This means sending money to a friend or family member through UPI will continue to be free, even when the transaction amount is above ₹2,000.
Complete UPI Fee Structure From October 15
The revised framework can be broadly understood as follows:| UPI Transaction Type | Transaction Amount | MDR |
|---|---|---|
| Person-to-person payments | Any amount | Free |
| Merchant payments | Up to ₹2,000 | Free |
| Standard merchant payments | Above ₹2,000 | 0.4% |
| Standard merchant payments | ₹75,000 and above | 0.4%, capped at ₹300 |
| Railways, telecom, insurance, fuel and agricultural inputs | Above ₹2,000 | ₹5 |
| Capital-market transactions | Above ₹2,000 | 0.02%, capped at ₹300 |
| Eligible small merchants under P2PM | Within qualifying limit | Free |
₹5 MDR for Selected Essential Services
Some sectors will not follow the standard 0.4% MDR structure.UPI transactions above ₹2,000 involving sectors such as railways, telecommunications, insurance, fuel and agricultural inputs will attract a flat ₹5 MDR. This structure is intended to provide greater predictability for sectors where margins can be relatively narrow.
Certain other essential-service categories, including specified utility and educational transactions, have also been reported under the flat-fee framework.
Lower MDR for Capital Market Payments
Transactions involving capital-market services will have a much lower MDR.Payments relating to mutual funds, securities, stockbrokers and dealers will attract an MDR of 0.02%, subject to a maximum cap of ₹300 per transaction.
This lower rate is designed to avoid placing a significant additional cost on digital payments connected with financial-market participation.
Small Merchants Will Remain Exempt
Small merchants are another important category covered by the new framework.Merchants receiving up to ₹1 lakh per month through UPI QR codes under the qualifying P2PM framework will continue to enjoy zero MDR. This means many neighbourhood shops, street vendors and other small businesses will not face the new charge.
The exemption is intended to prevent additional payment costs from affecting smaller businesses that rely heavily on UPI for everyday transactions.
What About UPI AutoPay and Recurring Payments?
Qualifying UPI AutoPay and recurring mandates are excluded from the new MDR framework.This means recurring payments such as certain utility bills, subscriptions, SIPs and similar pre-authorised debits will continue under the applicable existing framework without the new 0.4% MDR. One-time merchant payments above ₹2,000, however, can fall under the new MDR rules depending on the category.
Is ₹2,000 a New UPI Transaction Limit?
No. This is an important point for UPI users.The ₹2,000 figure is an MDR threshold and does not mean that UPI transactions are being limited to ₹2,000.
Users can continue to make larger UPI payments where the existing transaction limits and banking rules allow them. The new framework determines whether a merchant-side MDR applies to a particular transaction.
What Does the New UPI Rule Mean for Users?
For most people, the immediate impact is expected to be limited.Sending money to friends or family will remain free. Small merchant payments up to ₹2,000 will also remain free. The new MDR mainly affects eligible merchants receiving higher-value payments through UPI.
The government has said the framework is intended to support the long-term sustainability of the UPI ecosystem, including investment in infrastructure, cybersecurity and innovation.
Therefore, the headline around "UPI charges" should not be interpreted as a blanket fee on consumers. The October 15 changes primarily introduce a merchant-side MDR for specified higher-value transactions.
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