New Delhi, Sept. 22 -- A Merchant Discount Rate (MDR) of 0.4% will be applied to Person-to-Merchant (P2M) UPI transactions above Rs.2,000 from 15 October 2026. For transactions of Rs.75,000 and above, the MDR is capped at Rs.300 per transaction.

This means that when a customer makes a UPI payment of more than Rs.2,000 to a merchant, the MDR will be deducted from the merchant-side transaction. GST will also be applicable on the MDR charged.

The new framework has raised questions over whether the MDR, along with GST on the fee, will increase the cost of accepting digital payments for small merchants.

The National Payments Corporation of India (NPCI), however, has said such concerns are misplaced.

In a post on X, NPCI clarified that most...