When Will UPI MDR Start? Date, Timeline, and New Rules

Last updated: 20 September 2026

⚠️ Disclaimer: This page is for informational purposes only and does not constitute financial or legal advice. MDR rates are subject to change. Always verify with your acquiring bank or payment service provider.
Direct Answer: UPI MDR starts on 15 October 2026. The rate is 0.4% on P2M transactions above ₹2,000, capped at ₹300.

The Exact UPI MDR Start Date

UPI MDR of 0.4% is effective from 15 October 2026.

The policy was announced on 15 September 2026 via a Ministry of Finance release (PIB), following UPI Steering Committee deliberations, with an effective date of 15 October 2026.

Source: Ministry of Finance release of 15 September 2026 (PIB) | Last verified: 20 September 2026

Complete Timeline of UPI MDR Policy in India

DatePolicyMDR on UPI
January 2020Govt mandates zero MDR — PSS Act §10AZero MDR begins
2020–2026Zero MDR maintained; UPI grows rapidlyZero
15 Sep 2026Ministry of Finance announces new MDR framework (PIB)Policy announced
15 Oct 2026New MDR framework goes live0.4% on P2M > ₹2,000

What Exactly Changes on 15 October 2026?

Starting 15 October 2026:

  • UPI P2M transactions above ₹2,000: 0.4% MDR applies (max ₹300)
  • UPI P2M transactions at or below ₹2,000: still zero MDR
  • Flat ₹5 MDR for fuel, telecom, insurance, rail, agriculture above ₹2,000
  • Capital markets (MF, brokers): 0.02% MDR
  • Small merchants (P2PM ≤ ₹1 lakh/month): remain exempt
  • P2P transfers: currently free (no change)
  • RuPay debit card: zero MDR maintained (no change)
  • UPI AutoPay / recurring mandates: reported exempt under an NPCI clarification (17 Sep 2026, unverified)
  • GST applicability on UPI MDR is not confirmed; check with your bank (if charged, 18% on MDR amount)

Why Was the Zero-MDR Policy Revised?

Under the Ministry of Finance release of 15 September 2026 (PIB), the government announced a revised MDR framework for UPI transactions exceeding ₹2,000, while preserving zero MDR for small QR merchants (receiving up to ₹1 lakh/month) and everyday transactions at or below ₹2,000.

Impact on Merchants from 15 October 2026

The impact depends on your transaction profile. For most small businesses with average ticket sizes under ₹2,000 — grocery stores, tea shops, auto-rickshaws — there is zero impact. The MDR threshold of ₹2,000 is carefully chosen to exempt everyday small-value transactions.

For businesses with larger tickets — electronics, clothing, travel, services — the 0.4% applies, but the ₹300 cap means the maximum you pay per transaction is ₹300 regardless of the transaction size.

→ Use the MDR Calculator to estimate your monthly cost

Will UPI MDR Rates Change Again?

MDR rates are governed under regulatory guidelines and can be revised by the UPI Steering Committee or the Finance Ministry / RBI. Any change requires an official government release or regulatory notification.

We update this site as soon as we can verify an official announcement.

UPI MDR Date — FAQs

When will UPI MDR charges start in India?
UPI MDR charges officially start in India on 15 October 2026, under the regulatory framework announced in the Ministry of Finance release of 15 September 2026 (PIB).
When will the 0.4% UPI MDR charge apply?
The 0.4% UPI MDR charge applies starting 15 October 2026 on commercial Person-to-Merchant (P2M) transactions exceeding ₹2,000. It is deducted by the acquiring bank from the merchant's gross settlement.
Will UPI MDR start from 15 October 2026?
Yes. 15 October 2026 is the confirmed effective date when the zero-MDR policy transitions to the tiered MDR framework for merchant payments across India.
Is there any MDR on UPI?
Prior to 15 October 2026, UPI operated under a zero-MDR policy under Section 10A of the Payment & Settlement Systems Act. From 15 October 2026, a standard 0.4% MDR applies to merchant payments above ₹2,000 (capped at ₹300). However, transactions at or below ₹2,000, small QR merchants (≤ ₹1 lakh/month), and friend-and-family P2P transfers continue to have zero MDR.
What are the new UPI rules in 2026?

The new 2026 UPI rules announced in the Ministry of Finance release of 15 September 2026 (PIB) include:

  • 0.4% Standard MDR: On P2M transactions above ₹2,000, capped at ₹300.
  • Flat ₹5 Concessional Rate: On transactions above ₹2,000 for fuel, telecommunications, railways, insurance, and agricultural inputs.
  • 0.02% Rate for Capital Markets: Capped at ₹300 per transaction.
  • Zero MDR Threshold: All transactions of ₹2,000 or less remain free.
  • Small Merchant Exemption: Merchants receiving up to ₹1 lakh/month via QR code pay zero MDR.
  • 5% Small Merchant Fund: 5% of all MDR collections are allocated to a small-merchant enablement fund.
  • Consumer Protection: Banks have been advised that merchants must not pass MDR on to customers, and UPI apps cannot levy platform fees on consumers.
Who will pay MDR on UPI transactions?
Merchants (businesses) will pay MDR, not customers. When a customer makes a payment, the exact billed amount is debited with zero extra fees. The acquiring bank automatically deducts the MDR before settling funds into the merchant's account.
What are the charges for UPI transactions exceeding ₹2,000?

For transactions exceeding ₹2,000:

  • Standard Merchants: 0.40% MDR, capped at a maximum of ₹300 per transaction.
  • Essential Categories (Fuel, Telecom, Rail, Insurance, Agri-inputs): Flat ₹5 per transaction.
  • Capital Markets (Mutual Funds, Stockbrokers): 0.02% MDR, capped at ₹300.

GST applicability on UPI MDR is not confirmed; check with your bank. If your bank charges GST, it is 18% of the MDR amount, not of the transaction value.

Will all UPI transactions be charged MDR?
No. About 96% of person-to-merchant (P2M) transactions remain completely free of MDR because they fall below the ₹2,000 ticket threshold or qualify under the small-merchant exemption. Additionally, all peer-to-peer (P2P) transfers between individuals remain currently free.

📑 Sources & Regulatory References

Last updated: 20 September 2026. Independent informational guide based on published government and regulatory notifications.