Athira Sethu
Kochi, 17 Sep 2026
National Payments Corporation of India (NPCI) has now announced a new regulation regarding MDR on selected UPI transactions. This new regulation shall be effective from October 15, 2026. As per this new regulation, MDR of up to 0.4% may be applicable to certain selected UPI transactions in favor of merchants if the amount of transaction exceeds ₹2,000.
But there is no need to worry for normal UPI users as this charge need not be paid by them. This is because MDR is a charge paid by the merchant and not the customer. Furthermore, as per the clarification issued by the Department of Financial Services (DFS) under the Ministry of Finance, customers can continue to use UPI without having to pay any transaction charges.
For example, customers can pay after scanning the QR code in local stores, markets, street shops, petrol pumps, and other businesses without having to pay any extra UPI fee.
SIP and AutoPay?
Users who pay through UPI AutoPay or through UPI mandates are not required to pay MDR. These include mutual funds SIPs, utility bill payments, OTT subscriptions and many other recurring payments.
Payments on Insurance Premium
Customers making payment of insurance premium using UPI also won’t have to pay MDR. The insurance firms collecting premium greater than ₹2,000 will have to pay a fixed amount of ₹5 per transaction as MDR in accordance with the concessional regime.
Petrol Pump Payments
In case of payments using UPI at the petrol pumps, customers also won’t have to pay anything extra as MDR. Transactions over ₹2,000 will be charged ₹5 fixed MDR from the petrol pumps. Below ₹2,000 will have zero MDR.
Utility Bill Payments
There are also special provisions for payments related to the services like electric bills, water bills and piped natural gas bills. For bills over ₹2,000, ₹5 flat MDR will apply on the bill collector. Below ₹2,000 will have no MDR.
Stocks and Mutual Funds
The investors don’t have to pay MDR directly from their account in case of UPI based investments. The capital market transactions like stocks, mutual funds and securities and broker fees might involve MDR of 0.02% with maximum of ₹300 per transaction.
Thus, the new MDR regime affects primarily the merchants and service providers. The customers will still be able to use UPI for their routine payments without paying extra UPI transaction fee.
