UPI Merchant Discount Rate (MDR) [Prelims Bits]

18 Sep 2026

Tags: Prelims   Current events of national and international importance

Source: The Indian Express

• National Payments Corporation of India (NPCI) has finalised an MDR framework for selected Unified Payments Interface (UPI) merchant payments, effective 15 October 2026.
• MDR is paid by merchants to entities facilitating digital payments, not directly by UPI customers.

Key Prelims Facts

• P2P (Person-to-Person): Completely free, irrespective of transaction value.
• P2M (Person-to-Merchant):
  • Up to ₹2,000: No MDR.
  • Above ₹2,000: 0.4% MDR.
  • Above ₹75,000: MDR capped at ₹300/transaction.
• Essential services — railways, telecom, insurance, fuel, utilities, education and agricultural inputs:
  • ₹5 flat MDR for transactions above ₹2,000.
• Capital-market transactions — mutual funds, securities, stockbrokers and dealers:
  • 0.02% MDR, capped at ₹300/transaction.
• UPI AutoPay/mandates: Recurring utility bills, OTT subscriptions and recurring investments exempt from MDR.
• P2PM (Person-to-Person-Merchant):
  • Small merchants receiving up to ₹1 lakh/month through UPI QR into personal bank accounts are exempt.
  • If inward UPI credits exceed ₹1 lakh/month for 3 consecutive months, they shift to regular P2M category.