World · India Bureau
India introduces new merchant fees framework for UPI transactions from October 2026
India's government has unveiled a revised Merchant Discount Rate structure for Unified Payments Interface transactions, set to take effect on October 15, 2026. While retail UPI payments remain free for consumers, certain merchant categories including stock market and mutual fund purchases will face fee implications under the new rules.
LSN India ·
The Reserve Bank of India and the National Payments Corporation of India have finalized a fresh Merchant Discount Rate framework governing UPI transactions, marking a significant shift in the digital payments landscape. The new regulations will come into force from October 15, 2026, introducing differentiated fee structures across transaction categories.
Under the revised framework, standard consumer UPI payments will continue to remain free of charge, maintaining the accessibility that has driven widespread adoption of the platform across India. However, transactions exceeding ₹2,000 through certain merchant categories will attract MDR charges. The new structure specifically addresses capital market transactions, including share purchases, initial public offerings, and mutual fund investments, with separately prescribed fee rates for these financial services.
The government's move represents an attempt to balance the cost structures of digital payment infrastructure providers with the need to maintain UPI's appeal as a mass-market payment solution. Financial services transactions have been identified as a distinct category warranting specific fee consideration, reflecting their higher value and potentially different risk profiles compared to routine retail transactions.
Industry observers expect the framework will have limited impact on everyday consumer usage while creating new revenue streams for payment service providers through capital market transactions. The October 2026 implementation timeline provides merchants and financial institutions sufficient notice to adjust their systems and pricing strategies accordingly.