UPI charges explained: What happens when you pay ₹5,000, ₹50,000 or ₹1 lakh

The government estimates about 96% of merchant payments will remain unaffected by the changes. The network processed 24.51 billion transactions valued at 29.9 trillion rupees in August.

The introduction of a Merchant Discount Rate (MDR) on select UPI transactions from October 15, 2026 has triggered confusion over whether users will now have to pay for making UPI payments.

The short answer is no.

The new MDR is a charge levied within the merchant-payment ecosystem. It is not a fee that the customer pays while making a UPI transaction. Person-to-person (P2P) UPI transfers will continue to be free, while payments to merchants up to ₹2,000 will also remain free. The government has said that around 96% of merchant UPI transactions will remain unaffected.

However, for certain merchant transactions above ₹2,000, the merchant-side cost will change.

So, what is MDR?