No UPI Charge for Customers on Payments Above ₹2,000, Government Clarifies
The proposed Merchant Discount Rate (MDR) on UPI payments above ₹2,000 will apply only to eligible merchant transactions, not to individual users making digital payments.
New Delhi | August 5, 2026 The government has clarified that UPI users will not be charged for making payments above ₹2,000, despite confusion surrounding the proposed return of the Merchant Discount Rate (MDR) under the Payment and Settlement Systems (Amendment) Bill, 2027, introduced in Parliament.
The proposed MDR is expected to apply only to merchant transactions exceeding ₹2,000, meaning businesses—not customers—would bear the cost. Consumer-to-consumer (P2P) UPI transfers will remain free, and individuals can continue making payments above ₹2,000 without any additional charges.
According to reports, the proposed MDR could range between 0.25% and 0.4% for eligible merchant transactions, although the final rate and implementation timeline have not yet been decided.
The government had removed MDR on UPI and RuPay debit card transactions in January 2020 to encourage digital payments. The proposed change aims to support banks and payment service providers that facilitate merchant transactions.
Officials also noted that nearly 95% of UPI transactions are below ₹2,000, meaning only a small portion of commercial payments would potentially come under the proposed MDR framework.
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