A panel of banks and service providers will soon decide on implementing Merchant Discount Rate (MDR) charges for UPI transactions above ₹2,000 to merchants. This follows a recent government notification exempting charges on transactions up to ₹2,000.
₹2,000
MDR Discussion Threshold
⏳ Time Machine
How today’s news fits into the bigger picture
2016
UPI Launch
The National Payments Corporation of India (NPCI) launched the Unified Payments Interface (UPI), a system designed for instant real-time payments, which rapidly gained popularity due to its user-friendly interface.
January 2020
Zero MDR Mandate
The Indian government mandated a zero Merchant Discount Rate (MDR) for UPI and RuPay debit card transactions, aiming to boost adoption and reduce transaction costs for merchants.
March 2025
PCI Proposes MDR
The Payments Council of India (PCI) proposed reintroducing MDR on RuPay debit cards and a 0.3% MDR for UPI, specifically for large merchant transactions, to ensure financial sustainability of the payment ecosystem.
August 2026
Act Amended
The government passed amendments to the Payment and Settlement Systems Act, 2007, creating an enabling legal framework for potentially imposing MDR on in the future.
September 14, 2026
Notification for Free Transactions
A gazette notification clarified that UPI transactions up to ₹2,000 to merchants and all person-to-person transactions will remain free, setting the stage for discussions on higher-value payments.
Today
A committee is soon to decide on applying Merchant Discount Rate (MDR) charges for UPI transactions above ₹2,000, following a government notification keeping smaller transactions free.
What happens next?
The UPI & Services Steering Committee is expected to announce its decision on MDR charges in the near future, potentially introducing a tiered fee structure for higher-value merchant transactions.
A 22-member UPI & Services Steering Committee, including representatives from the Indian Banks' Association (IBA) and Payments Council of India (PCI), is set to decide on implementing Merchant Discount Rate (MDR) for Unified Payments Interface (UPI) transactions exceeding **₹2,000** to merchants. This comes after a government notification on September 14 clarified that UPI and RuPay debit card transactions up to ₹2,000 will remain free. The move aims to ensure the self-sustainability and expansion of the UPI ecosystem, which processed **2,366 crore transactions** worth ₹29.9 lakh crore in July 2026 alone.
💭 If you're wondering…
No, the government notification explicitly states that all person-to-person UPI transactions will continue to be free. The discussions are only for merchant transactions above ₹2,000.
Did this story help?
Official sources
Knowledge Chain — tap a concept