Understanding the upcoming UPI MDR regime
New rules governing merchant discounts on UPI payments will come into effect on 15 October 2026. The charges are not uniform but will vary by transaction value, the merchant category, and the type of payment used.
The framework outlines several charging paths, including a flat-fee option in some cases and percentage-based MDR in others. Reported options include a flat ₹5 per transaction or percentages in the range of 0.02% to 0.40%, depending on the specific scenario.
- What affects the charge: transaction size, the kind of merchant, and whether the payment is processed through a card-on-file, bank transfer, or another UPI mechanism.
- Who bears the cost: the MDR can influence pricing strategies for merchants and may flow through to consumers via checkout pricing or promotions.
- Key sectors touched: retail, services, and capital market-related payments are among the categories covered by the new rules.
- Implementation timeline: merchants, PSPs, and banks are expected to align their systems and disclosures ahead of the October deadline.
