New UPI Rules 2026: What the Latest Government Announcement Means for Users

The Unified Payments Interface (UPI) has transformed the way people make digital payments in India. From everyday purchases to transferring money, UPI has become an integral part of the country's digital payment ecosystem. 

The Unified Payments Interface (UPI) has become a widely used digital payment method in India. NPCI has now announced a revised Merchant Discount Rate (MDR) framework for select Person-to-Merchant (P2M) transactions. The framework will take effect from 15 October 2026. 

An MDR of 0.4% will apply to eligible P2M UPI transactions above ₹2,000. For eligible transactions of ₹75,000 and above, MDR will be capped at ₹300 per transaction. P2P transactions and eligible P2M payments up to ₹2,000 remain outside the MDR framework.  

No. Consumers will not pay a separate UPI transaction fee under the revised framework. UPI app providers will also not charge a platform fee or other charge to users for making payments through UPI. The MDR applies within the merchant payment ecosystem for eligible transactions. 

Person-to-Person (P2P) UPI transactions remain free, irrespective of the amount transferred, subject to applicable transaction rules. Eligible P2M payments up to ₹2,000 also remain outside MDR. Qualifying small merchants under the Person-to-Person-Merchant (P2PM) framework continue to receive zero MDR. 

Yes. Eligible payments above ₹2,000 in specified categories such as railways, telecom services, insurance, fuel and agri inputs will attract a flat MDR of ₹5 per transaction instead of the standard 0.4% rate.  

Eligible capital-market transactions, including payments relating to mutual funds, securities, stockbrokers and dealers, will attract MDR of 0.02%, subject to a maximum of ₹300 per transaction. UPI AutoPay transactions used for recurring payments such as SIPs remain free of the prescribed MDR.  

The revised MDR framework and threshold structure will take effect from 15 October 2026. The key point for consumers is that UPI is not becoming a paid service. The change is targeted at specified merchant transactions, while P2P payments and eligible low-value merchant payments remain free.  

The latest UPI rules clarify how MDR will apply to select merchant payments from 15 October 2026. Consumers will not pay a separate UPI transaction or platform fee. P2P transfers, eligible payments up to ₹2,000 and qualifying P2PM merchant transactions remain outside the MDR framework. Users can continue using UPI as usual and refer to official NPCI, RBI and Government notifications for future updates. 

Disclaimer: *Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.