UPI Charges: Will you pay extra for UPI payments over Rs 2000? Get all the details

Starting October 15, 2026, a Merchant Discount Rate (MDR) will apply to UPI payments over ₹2,000 for some specific businesses. But don't worry, this charge is not for regular customers.

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UPI MDR Charges Explained For Payments Over 2000 Rupees

From October 15, 2026, some merchants will have to pay a Merchant Discount Rate (MDR) on UPI payments over ₹2,000. However, this charge is not for regular customers. Small businesses are also kept out of this rule. People have many questions about this new system. Here’s a simple breakdown of who pays the charge, how much it is, and the rules for small businesses.

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No. The government's guidelines state this charge is only for Person-to-Merchant (P2M) transactions. Customers paying over ₹2,000 will not be charged. This fee applies only to certain merchants.

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If a merchant accepts a payment over ₹2,000, they will be charged an MDR of 0.4%, with a maximum cap of ₹300. No one will be charged more than ₹300 as MDR.

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Small businesses are exempt from the MDR charge. They will not be charged anything for accepting payments, whether the amount is less or more than ₹2,000.

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As per government guidelines, shopkeepers and small traders are considered Person-to-Person Merchant (P2PM) businesses. The government has stated that if these businesses accept up to ₹1 lakh in payments via QR code per month, they will not be charged any MDR.

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No, the guidelines are clear that no MDR charge is imposed on payments under ₹2,000. It doesn't matter if the business is big or small; no one will be charged for making or receiving payments below this amount.

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The government has stated that large merchants who accept payments over ₹2,000 make up only 5% of total UPI payments. The remaining 95% are small businesses, who will not be affected by this charge.

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Small businesses will not be affected. Under the P2PM system, small shopkeepers with a monthly income of up to ₹1 lakh via QR code will have zero MDR, even for payments over ₹2,000.

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No, that would be completely illegal. The government and banks have clearly stated that merchants cannot pass this fee on to customers. Also, payment apps like Google Pay, PhonePe, or Paytm cannot impose any platform fees on users.

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The government introduced this new MDR model to help banks and fintech companies cover the significant costs of securing the UPI network, increasing server capacity, and preventing cyber fraud. Also, 5% of the MDR collected will go into a special fund to expand digital infrastructure in rural and Tier-3 cities.

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The government has exempted businesses that receive less than ₹1 lakh in payments monthly. In a scenario where they suddenly receive a ₹1 lakh payment, they might have to pay MDR for that month. However, if their monthly digital payments are over ₹1,000 but individual transactions are under ₹2,000, no MDR will apply.

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The government's guidelines state that merchants in specific sectors will pay a maximum of ₹5 for payments over ₹2,000. This includes the telecom sector (recharges), insurance (premium deposits), railway tickets, and fuel (petrol/diesel). For these, the charge per transaction will be capped at ₹5.

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The government says that the MDR charge being introduced on UPI will not be higher than the charges on credit cards, debit cards, or wallets. In fact, it will be lower.