Introduction of MDR on large value transactions to strengthen UPI's long-term sustainability: RBI

The Reserve Bank of India (RBI) has introduced a 0.4% Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) Person-to-Merchant (P2M) transactions exceeding ₹2,000, effective October 15, 2026. This measure aims to bolster the long-term sustainability and growth of India's digital payments ecosystem by encouraging investment in technology and infrastructure. Crucially, Person-to-Person (P2P) transactions and P2M transactions below ₹2,000 will remain free for both customers and merchants. The MDR is levied on merchants, not on customers making payments. UPI, launched in 2016 and operated by the National Payments Corporation of India (NPCI), an initiative of RBI and the Indian Banks' Association, has seen significant growth and is now accepted in 11 countries.