The Reserve Bank of India announced that from October 15, 2026, merchants will have to pay a merchant discount rate on UPI transactions above ₹2,000. The move follows a surge in digital payments, with the RBI estimating that over 5 billion UPI transactions will exceed the threshold by year‑end. The fee structure, detailed in a regulatory brief, will apply to most industries except those under the zero‑MDR scheme.
Industry‑specific rates vary; retail and services will face rates of 1.5%, while hospitality and travel could see up to 3.0%. Despite the change, 96% of P2M transactions remain free, as transactions up to ₹2,000 will continue without charge. Small‑scale traders, however, may feel the pinch as their average transaction value climbs.
The UPI update arrives alongside a host of other financial reforms. SBI will cut free ATM withdrawals for salary‑account holders from ten to five per month on October 1. The RBI will also mandate daily disclosure of bulk‑FD rates, and the Pension Fund Regulatory and Development Authority will lift a one‑time ₹200 onboarding fee for NPS subscribers.
RBI Governor Shaktikanta Das told a press conference that the new MDR aims to balance revenue for banks and cost for merchants while keeping payments efficient. He added that the regulator will monitor compliance through a digital dashboard released on October 5.
Merchants are urged to update their payment terminals and educate staff on the new fee schedule. Consumers, meanwhile, may see a slight uptick in prices for goods purchased via UPI, as shopkeepers adjust to the added cost.
The RBI will begin enforcement on October 20, with penalties for non‑compliance outlined in Notification 2026‑07. Banks are expected to roll out software patches to facilitate the change by September 30.