India Sets MDR for High-Value UPI Payments

India will introduce a merchant discount rate (MDR) on eligible person-to-merchant UPI payments above ₹2,000 from October 15, 2026, while person-to-person transfers and consumer payments will remain free. The standard MDR will be up to 0.4%, capped at ₹300 for transactions of ₹75,000 or more; railways, telecom, insurance, fuel and agricultural-input payments will instead face a flat ₹5 charge above the threshold. Small merchants receiving up to ₹1 lakh monthly through qualifying UPI QR codes, as well as eligible rural and semi-urban transactions, will remain exempt. Merchants cannot add the MDR as a separate UPI surcharge. The government and RBI say the measure will support the financial sustainability of the expanding payments system and fund cybersecurity, fraud prevention, resilience, technology, acceptance infrastructure and customer support, while rejecting claims that foreign pressure drove the decision. Officials have ruled out a rollback despite opposition from Congress, traders, shopkeepers and Swadeshi Jagran Manch leader Ashwani Mahajan, who have called it a “UPI tax” and warned that businesses could pass costs to consumers or undermine UPI’s low-cost model.