New Delhi, September 16 (APAC Media):Â On September 14, 2026, the Central Government notified that UPI transactions up to Rs. 2,000 will attract a zero Merchant Discount Rate (MDR) under the new framework.
Now, the National Payments Corporation of India (NPCI) has issued a detailed circular, outlining operational parameters, fee distribution mechanisms, and category-wise caps following deliberations by the UPI Steering Committee.
No Charges for Person-to-Person UPI Transactions
Under the new framework, person-to-person (P2P) UPI transactions will remain completely free, irrespective of the transaction amount.
P2P payments account for around 37% of UPI transactions by volume and 70% by value, highlighting their significant role in India’s digital payments ecosystem.
Charges will apply only to person-to-merchant (P2M) transactions above Rs. 2,000.
0.4% MDR for High-Value Merchant Transactions
For eligible P2M transactions exceeding Rs. 2,000, an MDR of 0.4% will be levied. The fee will be distributed among participants in the payment ecosystem, including banks and UPI app providers.
For transactions of Rs. 75,000 and above, the MDR will be subject to a maximum cap of Rs. 300 per transaction.
The revised framework seeks to distinguish between consumer-to-consumer payments and larger merchant transactions while establishing clearer rules around charges and fee distribution within the UPI ecosystem.
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