🗓 Effective: 15 October 2026

UPI MDR Charges 2026:
Calculator & 0.4% Rule Explained

From 15 October 2026, UPI P2M transactions above ₹2,000 attract a0.4% Merchant Discount Rate (capped at ₹300). Calculate your exact MDR, compare payment modes, and understand what this means for your business. Consumers pay nothing extra.

0.4%UPI MDR rate
₹2,000Threshold (below = zero)
₹300Maximum per transaction
₹5Flat fee (fuel/rail/telecom)
🧮 Open CalculatorRead Full Explanation →
Quick Answer: MDR stands for Merchant Discount Rate — a fee paid by merchants (not customers) to process digital payments. For UPI, it is 0.4% on amounts above ₹2,000, effective 15 Oct 2026, with a cap of ₹300.→ MDR Full Form explained

MDR Calculator

MDR Calculator

Enter transaction details to calculate Merchant Discount Rate charges

Enter the payment amount
Enter 0 to use official rate, or enter your bank's rate
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Enter an amount and click Calculate MDR

⚠️ Estimate only. Your actual MDR depends on your bank or payment gateway agreement. GST-registered merchants can claim ITC on MDR GST.

MDR Rates at a Glance

Current MDR Rates at a Glance

Updated Sep 2026
Merchant Discount Rate (MDR) for different payment modes in India, effective October 15, 2026
Payment ModeMDR RateThresholdCapGST on MDRSource
UPI (Person-to-Merchant)0.4% or ₹5 (special categories)₹2,000₹300NoMinistry of Finance release of 15 September 2026 (PIB)
RuPay Debit CardZero——NoPIB
RuPay Credit Card (via UPI)⚠️ Est.Varies——18%Unverified (commercial agreement with acquiring bank)
Debit Card (Visa / Mastercard — up to 0.90%)0.90%—₹1,00018%RBI 6 Dec 2017 & PIB 19 Mar 2025
Credit Card (Indicative)⚠️ Est.2.00%——18%RBI (market-determined rate — varies by bank/network)
Net Banking⚠️ Est.Varies——18%RBI (no standardised cap — PSP-negotiated)
Prepaid Wallet (Paytm, PhonePe wallet, etc.)⚠️ Est.Varies——18%RBI (varies by PPI issuer agreement)

⚠️ Rows marked "Est." have no confirmed primary source. Rates effective from 15 October 2026. Always verify with your acquiring bank or payment gateway.Learn more about our sources →

What Is MDR and Why Does It Matter for Merchants?

MDR (Merchant Discount Rate) is the fee a business pays to its bank or payment gateway for processing digital transactions — whether via UPI, card, or net banking. When a customer pays ₹5,000 via UPI after 15 October 2026, the merchant receives approximately ₹4,976 — a ₹24 difference consisting of ₹20 MDR and ₹3.60 GST on that MDR.

History: Why Was UPI Free Until Now?

The Government of India mandated zero MDR on UPI and RuPay debit cards effective 1 January 2020, under an amendment to Section 10A of the Payment and Settlement Systems (PSS) Act, 2007, and CBDT Notification No. 105/2019. This move was intended to accelerate digital payment adoption by removing costs for merchants.(RBI / PSS Act source)

What Changes on 15 October 2026?

Following a policy review by the NPCI UPI and Services Steering Committee, and a government notification on 14 September 2026, a new MDR framework takes effect on 15 October 2026:

  • 0.4% MDR on UPI P2M transactions above ₹2,000
  • Transactions at or below ₹2,000: zero MDR
  • Cap: ₹300 per transaction (applies from ₹75,000 onwards)
  • Special categories (fuel, telecom, insurance, rail, agri-inputs): flat ₹5 per transaction above ₹2,000
  • Capital markets (mutual funds, brokers): 0.02% MDR, capped ₹300 (above ₹2,000)
  • UPI AutoPay / recurring mandates (SIPs): reported exempt (unverified)
  • Small merchants (P2PM): receiving ≤ ₹1 lakh/month via QR code: exempt
  • Person-to-Person (P2P) transfers: always free
  • RuPay debit card: still zero MDR

Source: Ministry of Finance release of 15 September 2026 (PIB) | Last updated: 20 September 2026

Who Pays MDR — Merchant or Customer?

Only the merchant pays MDR. Banks have been advised that merchants must not pass MDR on to customers as a surcharge. UPI remains completely free for the person making the payment. Furthermore, MDR is neither a tax nor a charge collected by the government or NPCI; about 96% of person-to-merchant (P2M) transactions remain unaffected, and 5% of total MDR collections are earmarked for a small-merchant enablement fund.

🔗 Related:UPI MDR Charges Explained |GST on MDR |When Does MDR Start? |Is UPI Still Free?

Frequently Asked Questions

What is MDR (Merchant Discount Rate)?
Merchant Discount Rate (MDR) is the fee a merchant pays to acquiring banks and payment service providers for processing digital transactions. When a customer pays electronically, a small percentage or flat fee is deducted from the gross transaction value before settling the balance into the merchant's account. MDR is neither a tax nor a government levy; it is a processing fee that sustains payment gateway operations, network switching, security, and banking infrastructure.
What is the full form of MDR in banking?
In banking and financial terminology, the full form of MDR is Merchant Discount Rate. The word 'discount' refers to the deduction taken from the face value of the payment before the net amount is credited to the merchant.
What is MDR in UPI?
In the Unified Payments Interface (UPI), MDR refers to the fee charged to merchants on Person-to-Merchant (P2M) payments. Under the Ministry of Finance notification of 15 September 2026, standard UPI P2M payments above ₹2,000 carry a 0.4% MDR (capped at ₹300). Everyday micro-payments of ₹2,000 or less, person-to-person (P2P) transfers, and small merchants receiving up to ₹1 lakh per month via QR code remain completely exempt (0% MDR).
Who pays MDR — the merchant or the customer?
The merchant pays MDR, not the customer. When a buyer pays ₹3,000 via UPI, exactly ₹3,000 is debited from the customer's bank account with zero extra fees or surcharges. The acquiring bank deducts the MDR from the merchant's settlement. Banks have been advised that merchants must not pass MDR on to customers as a surcharge.
Is UPI free in 2026?
Yes, for retail consumers, UPI is 100% free for all purchases, bills, and peer-to-peer transfers between friends and family. UPI applications cannot levy platform fees on consumers. For merchants, about 96% of person-to-merchant (P2M) transactions remain completely free due to the ₹2,000 ticket-size threshold and small-merchant exemptions. Only transactions above ₹2,000 at non-exempt businesses attract MDR.
What changes to UPI MDR from 15 October 2026?

From 15 October 2026, the zero-MDR policy transitions to a tiered MDR framework announced in the Ministry of Finance release of 15 September 2026 (PIB):

  • Standard P2M: 0.4% MDR on transactions above ₹2,000, capped at ₹300 per transaction.
  • Flat ₹5 categories: Fuel, telecommunications, railways, insurance, and agricultural inputs pay a flat ₹5 per transaction above ₹2,000.
  • Capital markets: 0.02% capped at ₹300 per transaction above ₹2,000.
  • Zero MDR threshold: All transactions of ₹2,000 or less remain free.
  • Small merchant exemption: Merchants receiving up to ₹1 lakh/month via QR code pay zero MDR.
  • Small merchant enablement fund: 5% of all MDR collections go toward a dedicated fund supporting small merchants.
What is the 0.4% UPI MDR rule?
The 0.4% UPI MDR rule applies a 0.40% processing fee on UPI merchant transactions exceeding ₹2,000, subject to an upper cap of ₹300 per transaction. For example, on a ₹3,000 transaction, MDR is ₹12. On a ₹50,000 transaction, MDR is ₹200. On transactions of ₹75,000 and above, the fee reaches the maximum ₹300 cap. Any transaction of ₹2,000 or less incurs ₹0 MDR.
Is GST charged on UPI MDR?
GST applicability on UPI MDR is not confirmed; check with your bank. If your bank charges GST, it is 18% of the MDR amount, not of the transaction value. If charged by your bank, GST-registered merchants can claim Input Tax Credit (ITC) on the GST paid on MDR.
How is UPI MDR calculated?

UPI MDR calculation depends on transaction value, merchant category, and turnover:

  1. Transactions ≤ ₹2,000: MDR is always ₹0.
  2. Small QR merchants (≤ ₹1L/month): MDR is ₹0.
  3. Standard merchants (> ₹2,000): MDR = Min(Amount × 0.004, ₹300).
  4. Essential categories (fuel, telecom, rail, insurance, agri > ₹2,000): Flat ₹5.
  5. Capital markets (> ₹2,000): MDR = Min(Amount × 0.0002, ₹300).
  6. Net settlement: Amount − (MDR + applicable GST).
What is the MDR on UPI for fuel, telecom, railways, and insurance?
For five specified essential categories — fuel, telecommunications, railways, insurance, and agricultural inputs — a concessional flat MDR of ₹5 per transaction applies on UPI P2M payments above ₹2,000. Transactions at or below ₹2,000 remain completely free (₹0). Note that utilities are not part of this flat-fee schedule under the official 15 September 2026 government release.
Does RuPay credit card on UPI have MDR charges?
Yes, RuPay credit cards used via UPI follow credit card interchange and MDR frameworks rather than the debit zero-MDR rule. MDR on RuPay credit cards on UPI is set by the acquiring bank and varies by merchant category, so merchants should ask their bank. In contrast, standard RuPay debit cards remain zero MDR under the Payment and Settlement Systems Act.
How can merchants calculate UPI MDR charges?
Merchants can calculate their exact MDR deductions and net payouts using the free interactive calculator on mdrfee.com. The tool supports Standard calculation (instant MDR & GST breakdown), Reverse calculation (desired net payout to gross bill), Cross-Mode comparison (UPI vs RuPay debit vs Visa/Mastercard vs Credit Card), and Monthly volume projections.

Explore All MDR Topics

UPI MDR Charges

Full breakdown of UPI P2M charges, exemptions, and merchant impact

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MDR Full Form

What MDR stands for in banking, UPI, and digital payments

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What Is MDR in UPI?

Plain-language explanation of how MDR works

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UPI MDR Date

When 0.4% MDR starts and the complete timeline

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GST on MDR

How 18% GST is calculated on MDR, and who can claim ITC

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Is UPI Free?

Busting the 'UPI Tax' myth — what's actually changing

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RuPay Credit Card MDR

MDR on RuPay credit cards linked to UPI

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Who Is Affected?

Impact on merchants, fintechs, banks, and the ecosystem

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हिंदी में पढ़ें

MDR क्या है, UPI MDR कब से लागू होगा — हिंदी में

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