New Delhi, Oct. 7 -- With the festive season approaching, consumers making high-value purchases through UPI may be wondering whether the newly introduced merchant discount rate (MDR) will make their shopping more expensive. The new MDR framework for select UPI person-to-merchant (P2M) transactions takes effect from 15 October 2026, with a 0.4% MDR on transactions above Rs.2,000 and a cap of Rs.300 for transactions of Rs.75,000 and above.

However, consumers will not have to pay this MDR. The Department of Financial Services (DFS), under the finance ministry, has explicitly said that UPI services will continue to be free for consumers. Merchants are also not permitted to pass the MDR on to buyers, meaning the customer should continue to pa...