UPI processed 24.5 billion transactions worth ₹29.82 lakh crore in August 2026, according to NPCI data, making it the largest digital payment platform in India.
The new MDR applies only to person-to-merchant transactions above ₹2,000, with a flat 0.4 % fee capped at ₹300 for amounts of ₹75,000 and higher.
Merchant payments of ₹2,000 or less remain exempt, and person‑to‑person transfers stay free; the fee covers only the merchant side, not the consumer.
Under the new scheme, 96 % of all UPI merchant transactions will not be affected, while 4 % of higher‑value payments will carry the charge.
The fee is split 40 % to the issuing and customer banks, 30 % to the merchant acquirer or gateway, 20 % to the UPI app, and 10 % to the payer PSP bank, with no share going to the Consolidated Fund.
NPCI reported that only 4 % of person‑to‑merchant transactions exceed ₹2,000, yet these high‑value payments account for a larger share of UPI’s total value, prompting the government’s push for a sustainable funding model.
Small merchants who receive up to ₹1 lakh monthly through UPI QR codes remain exempt, and the government earmarks 5 % of MDR revenue to expand UPI acceptance among them.
Banks will be instructed to prevent merchants from passing the fee to customers, and NPCI will monitor compliance from the 15 October rollout.