India Adds 0.4% MDR to UPI Payments Above ₹2,000

The Finance Ministry announced the new structure on September 15. P2M payments up to ₹2,000 keep zero MDR. Small merchants covered by the existing exemption are also outside the new rate.

The ministry said about 96% of P2M transactions would remain free of MDR. It did not state the reference period used for this share.

A second update came on September 17. Officials said implementation would be checked every day after the October 15 start.

Payment aggregators are also involved. One issue for the government is merchants adding the fee to the amount paid by customers.

₹75,000 Is the Cap Point

For a standard merchant payment, ₹50,000 ($521.05) gives ₹200 ($2.08) in MDR. At ₹75,000 ($781.58), the fee reaches ₹300 ($3.13). This is the maximum, so a larger payment does not produce a higher MDR.

These are 15M calculations. USD conversions use about ₹95.96 per $1 on September 15, 2026.

P2P remains different. The same ₹50,000 transferred between two individuals carries no MDR.

Online Money Games Remain Blocked

The new rate should not be considered as a fee for making legal betting deposits. Based on India’s 2026 gambling framework, online money games are prohibited. Transactions associated with these games cannot be processed through banks and other payment processors. The rules are effective from May 1, 2026.

Starting from October 15, payment classification will also determine whether the new MDR applies to a UPI transaction.