UPI MDR Charges: Will newly introduced fees impact your Diwali, Dhanteras shopping bills?

UPI MDR will apply to select merchant transactions above ₹2,000 from 15 October 2026, but consumers will not have to pay the charge. Here’s what the new rules mean for Diwali and Dhanteras shopping, including high-value purchases.

With the festive season approaching, consumers making high-value purchases through UPI may be wondering whether the newly introduced merchant discount rate (MDR) will make their shopping more expensive. The new MDR framework for select UPI person-to-merchant (P2M) transactions takes effect from 15 October 2026, with a 0.4% MDR on transactions above ₹2,000 and a cap of ₹300 for transactions of ₹75,000 and above.

However, consumers will not have to pay this MDR. The Department of Financial Services (DFS), under the finance ministry, has explicitly said that UPI services will continue to be free for consumers. Merchants are also not permitted to pass the MDR on to buyers, meaning the customer should continue to pay the posted price of the product or service.

What is changing from 15 October?

The new framework introduces an MDR of 0.4% on UPI P2M transactions above ₹2,000. For transactions of ₹75,000 and above, the MDR is capped at ₹300 per transaction. The MDR is paid by the merchant within the UPI payment ecosystem and is distributed among ecosystem participants.

Transactions of up to ₹2,000 will not be affected. According to the DFS FAQ, such small-value P2M transactions account for more than 95% of the total volume of UPI P2M transactions. Small merchants covered under the P2PM framework will also continue to have zero MDR.