P2P UPI transfers remain free. Merchant payments up to ₹2,000 remain free. From 15 October 2026, specified merchant (P2M) payments above ₹2,000 can attract MDR of 0.4%, capped at ₹300 per transaction. MDR is a payment ecosystem charge, not a tax.
Person-to-person UPI transfers remain free under the current framework, irrespective of the transaction amount.
Bank-specific and app-specific limits, cooling-off periods and new-payee restrictions still apply, so a transfer can fail on limits even though no charge applies.
Merchant (P2M) UPI payments with a value of ₹2,000 or less remain free of MDR under the current framework. This is the threshold most news headlines refer to as the “₹2,000 UPI rule”.
Starting 15 October 2026, specified P2M UPI transactions above ₹2,000 can attract MDR under the currently announced structure:
| Transaction value | MDR rate | Indicative charge | Cap |
|---|---|---|---|
| ₹2,000 or less | Nil | ₹0 | — |
| ₹5,000 | 0.4% | ₹20 | — |
| ₹10,000 | 0.4% | ₹40 | — |
| ₹50,000 | 0.4% | ₹200 | — |
| ₹75,000 | 0.4% (capped) | ₹300 | ₹300 |
| ₹1,00,000 | 0.4% (capped) | ₹300 | ₹300 |
Eligible small merchants can remain outside MDR under the applicable zero-MDR framework.
Small-merchant eligibility is determined by the merchant classification applied by the acquiring bank or payment aggregator, based on the criteria in the applicable framework. It is not decided by the customer, by the app used, or by the size of a single transaction. A merchant should confirm their classification directly with their acquiring bank or aggregator, because misclassification is the most common reason a merchant is charged unexpectedly.
Certain categories are reported to follow a separate or flat charge structure rather than the standard merchant structure. Reported categories include:
Exact treatment should always be verified against the latest NPCI or bank circular applicable to that transaction category.
The government has stated that UPI users should not be charged the MDR directly — the charge is intended for the merchant and payment ecosystem. That statement concerns the regulated UPI charge. It does not mean every business in every commercial arrangement is barred from setting its own prices; separate commercial pricing is a different matter from a customer-facing UPI fee.
Person-to-person UPI transfers carry no UPI charge under the current framework, irrespective of the transfer amount. Bank and app specific limits still apply.
Applies to: Individual to individual transfers, Transfers between your own accounts
Does not apply to: Merchant (P2M) collections
✓ Official source — NPCI UPI circulars · View · Verified 16 September 2026
UPI payments to merchants with a transaction value of ₹2,000 or less continue with no MDR under the current framework.
Applies to: QR code payments, Merchant UPI collections of ₹2,000 or less
Does not apply to: Merchant transactions above ₹2,000
✓ Official source — NPCI UPI circulars · View · Verified 16 September 2026
From 15 October 2026, specified P2M UPI transactions above ₹2,000 can attract MDR of 0.4%, with a maximum of ₹300 per transaction for transactions of ₹75,000 and above. MDR is a merchant/payment ecosystem charge, not a government tax.
Applies to: Specified (non-exempt) merchant categories, Transactions above ₹2,000
Does not apply to: P2P transfers, Eligible small merchants under the zero-MDR framework, Transactions of ₹2,000 or less
✓ Official source — NPCI UPI circulars · View · Verified 16 September 2026
Eligible small merchants can remain outside MDR under the applicable zero-MDR framework. Eligibility depends on the merchant classification applied by the acquiring bank or payment aggregator — it is not decided by the customer or by transaction size alone.
Applies to: Merchants classified as eligible small merchants
Does not apply to: Merchants outside the eligible small-merchant classification
✓ Official source — NPCI / acquiring bank circulars · View · Verified 16 September 2026
Certain categories — including railways, fuel, agriculture, utilities, telecom, insurance, credit card bill payments and tax payments — are reported to follow a separate or flat charge structure. Exact treatment must be verified against the latest NPCI or bank circular applicable to the transaction.
Applies to: Railways, Fuel, Agriculture, Utilities, Telecom, Insurance, Credit card payments, Tax payments
Does not apply to: Ordinary retail merchant categories
✓ Official source — NPCI UPI circulars · View · Verified 16 September 2026
| Date | What changed | Who is affected | What did NOT change |
|---|---|---|---|
| 15 September 2026 | MDR framework for merchant UPI above ₹2,000 announced | Non-exempt merchants | P2P transfers, sub-₹2,000 merchant payments |
| 15 October 2026 | Announced MDR of 0.4% becomes applicable, capped at ₹300 | Specified merchant categories | Customer-facing UPI remains free of MDR |
This page is educational information, not professional tax, legal or financial advice. Rules can change — verify against the latest official notification or consult a qualified professional before acting.