UPI Merchant Rules from 15 October 2026: Rates, Caps & Exemptions
From 15 October 2026, MDR applies to specified bank-account UPI merchant payments. The amount, provider-confirmed account category and sector determine the rate. This is a merchant cost, not a customer surcharge.
Which rate applies?
Use your provider-confirmed classification. A shop's business type alone does not establish a special rate or exemption.
| Payment / category | Merchant MDR |
|---|---|
| Payment up to ₹2,000 | ₹0 |
| Regular P2M above ₹2,000 | 0.4%, capped at ₹300 per payment |
| Provider-confirmed exempt P2PM | ₹0 |
| Approved essential / thin-margin sector above ₹2,000 | Flat ₹5 per payment |
| Capital markets above ₹2,000 | 0.02%, capped at ₹300 per payment |
Examples, not shop averages
For regular P2M under the scheduled framework, a ₹2,000 payment has ₹0 MDR; a ₹5,000 payment has ₹20 MDR; a ₹1,00,000 payment reaches the ₹300 MDR cap. These examples exclude GST and other provider charges.
A monthly average can hide payments below the threshold or above the cap. Model each bill amount and its monthly count instead.
What to check with your provider
- Your account's P2M or P2PM status and merchant-sector mapping.
- Whether the customer's payment comes from a bank account. Credit-linked UPI and wallet/PPI need separate pricing.
- Your invoice's tax, other charges, settlement timing and how the announced rules will be implemented.
Before the effective date, do not treat the scheduled MDR as a current bank deduction. Existing QR stands and soundboxes do not need replacing because of the announced framework.
Estimate your merchant fee
Model one bill or your monthly bill mix with explicit category, date and tax assumptions.
Open fee calculatorCommon questions
Does a payment above ₹2,000 always attract MDR?
No. Provider-confirmed exempt P2PM accounts retain zero MDR. Other categories have their own rates. Confirm your classification before estimating a fee.
Does this guide establish an automatic 18% GST addition?
No. Confirm the tax treatment on your provider invoice. The calculator offers 18% GST on the fee as an optional scenario, not as a universal deduction.
Can the merchant pass MDR to the customer?
The Ministry of Finance says MDR is a merchant-side charge and banks have been advised to ensure merchants do not pass it to customers.
Sources and review date
Reviewed against the DFS FAQ dated 15 September 2026 and the Ministry of Finance announcement on 3 October 2026. This page does not update automatically. Recheck policy and provider implementation after 15 October.
Create a UPI QR for your bill amount
Enter the final bill and show a QR with the amount pre-filled. Payment-app behaviour may vary. Check receipt on your existing soundbox or business app.
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