What happened
MDR on P2M UPI starts October 15 with a 0.4 percent charge above Rs 2,000, while a Rs 2,000 crore subsidy remains in the FY2026-27 budget.
Why it matters
Most small merchants and users won't see a price change now, but the subsidy's exact size is still in talks.
Remember this
MDR lands October 15; UPI subsidy keeps running.
What is still unclear
The subsidy continues, but its quantum and shape are being finalised in Finance Ministry talks with the Indian Banks' Association.
- Exact subsidy amount for the post-MDR period is not fixed.
- Whether the incentive will be a flat cap, per-transaction rebate, or a mix.
- How long the Rs 2,000 crore pot is meant to cover FY2026-27.
More context & who is affected
UPI will start charging merchants from October 15, yet the government subsidy for the platform will not stop.
For FY2026-27 the budget already funds Rs 2,000 crore for RuPay and low-value BHIM-UPI. Above Rs 2,000 the P2M rate is 0.4 percent, capped at Rs 300 per swipe.
Finance Ministry will work out with banks how large and how structured that subsidy will be.
- MDR go-live
- Oct 15, 2026 0.4 percent on P2M UPI above Rs 2,000, capped at Rs 300 per swipe.The HinduLiveMint
- FY2026-27 subsidy
- Rs 2,000 crore Budgeted for RuPay debit and low-value BHIM-UPI incentives.The Hindu
- Transactions unaffected
- ~96 percent P2P, sub-Rs 2,000 P2M and small merchants stay free of MDR.LiveMint
Aud Merchants
Merchants on P2M UPI above Rs 2,000 will start paying a 0.4 percent charge when MDR goes live in October.
Aud Consumers · Aud Merchants
A Rs 2,000 crore subsidy for RuPay and low-value UPI stays in the FY2026-27 budget; its exact form is still being negotiated with banks.
Aud Consumers
Around 96 percent of UPI transactions stay free, so most small users will not see an immediate price change.
Story updates 25
Key developments (25)
Follow-up events appended to this developing story
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Second-half slowdown hints at early MDR caution in UPI
NPCI data: September UPI volumes down 1.8% and value down 1.5% MoM; second-half dip sharper than seasonal after the 15 September MDR announcement.
Source: Mint (LiveMint) -
Business Standard poll: RBI may hike repo rate 25 bps in Oct, 8 of 10 economists say
8/10 economists poll expects 25bp RBI repo hike Oct 5-7; last hike Feb 2023, rate held at 5.25% since
Source: Business Standard -
Supreme Court Refuses Stay on UPI MDR Levy, Gives Centre Four Weeks
Bench led by CJI Surya Kant refuses interim stay on the 0.4 percent UPI MDR levy for payments above Rs 2000 effective Oct 15 and gives the Centre four weeks to file its counter-affidavit.
Source: Supreme Today AI -
SBI chief: banks, NPCI will shield consumers from UPI MDR pass-on
SBI chairman CS Setty outlines NPCI-bank system controls and a 96% exemption estimate to keep UPI MDR off consumers and small merchants.
Source: The Times of India -
Bandhan Life Insurance expects RBI repo hike of 50-75 bps this cycle
Bandhan Life Insurance report expects an RBI repo hike of 50-75 bps; markets expected to turn stock-specific.
Source: ETBFSI (via IANS) -
UPI logs 145B transactions in H1 FY27 before new MDR regime
NPCI data: 145B UPI transactions in H1 FY27 (+27% YoY); Sept MoM dip; new 0.4% MDR on transactions above Rs 2,000 starts Oct 15.
Source: The Times of India -
UPI MDR kicks off 15 Oct: ₹5, 0.4% slabs, ₹300 cap, small merchants free
NPCI MDR start date, slab levels, ₹300 cap and small-merchant zero-fee threshold confirmed
Source: Mint -
Payment aggregators negotiate 50-80% cut of the bank's UPI MDR share
Payment aggregators are negotiating for 50-80% of the acquiring bank's 0.12% UPI MDR cut, ahead of the October 15 rollout.
Source: The Financial Express -
UPI MDR rates differ by sector: flat Rs 5 for rail, fuel, insurance, 0.02% for capital markets
ETNow details sector-specific MDR rates, P2PM monthly threshold, and Finance Ministry's 96% unaffected estimate.
Source: ET Now -
UPI MDR split set at 40/30/20/10 between banks and the UPI app
ETBFSI spells out the 40/30/20/10 MDR split and NPCI's annual revenue estimate.
Source: ETBFSI -
Survey: only 17% of merchants willing to eat the new UPI fee
LocalCircles survey: 83% of merchants won't absorb 0.4% UPI MDR; 76% of users may drop UPI for larger payments.
Source: India Today -
UPI enters the paid tier; Indonesia and Malaysia keep micro merchants free
Mint adds the international comparison: Indonesia QRIS and Malaysia DuitNow fee structures vs India's 15 October UPI MDR rule.
Source: Mint (livemint.com) -
Former RBI Governor asks GST Council to leave UPI's new MDR fee untaxed
C. Rangarajan urges GST Council to exempt the 0.4% UPI MDR from tax ahead of the Oct 15 rule start.
Source: The Hindu -
Punjab & Sind Bank MD: shops can't push UPI MDR onto customers
PSB MD says stores must absorb UPI MDR; flat Rs 5 for fuel, railways, telecom and insurance above Rs 2,000.
Source: Moneycontrol (via PTI) -
A tenth of UPI value could slip away if merchants surcharge the new MDR
LocalCircles projects up to a 10% drop in UPI transaction value in the first full month of the 0.4% MDR, with users splitting between cash and credit cards.
Source: Udaipur Kiran -
Goldman Hikes Paytm Target To Rs 2,070, Credits UPI MDR For EBITDA Boost
Goldman Sachs raises Paytm target to Rs 2,070, says UPI MDR can drive 40% EBITDA upgrade.
Source: NDTV Profit -
Rupee slips to 96.78, Brent tops $102 after RBI hike
Post-RBI slide pushes INR to weakest since May; Brent above $102 adds pressure; Goldman flags hawkish hike.
Source: Business Recorder (Reuters) -
RBI chief: rupee likely undervalued; markets can stay irrational in the short run
Malhotra calls rupee undervalued, defends RBI hedging, cites FDI surge and possible AI-stock rotation.
Source: Times of India -
NPCI may push UPI merchant fee rollout to January 2027
NPCI may defer the UPI merchant fee from October 15 to January 1, 2027; payment stocks fell sharply on the report.
Source: Reuters -
NPCI says shelf prices will not rise under UPI MDR; launch may slip to Jan 2027
NPCI FAQ rules out shelf-price hikes under UPI MDR; rollout may slip to Jan 2027 per Reuters.
Source: Mint -
UPI MDR deadline slides toward January 2027 as trade bodies press for delay
UPI MDR rollout slips from Oct 15 to Jan 2027 per TOI as trade bodies cite festival-season risks; NPCI framework is 0.4% above Rs 2,000, capped at Rs 300.
Source: The Times of India -
IIT Bombay study: UPI MDR pass-through lifts prices even for small purchases
IIT Bombay report says MDR costs get passed on via higher prices, cross-subsidising small-ticket UPI users.
Source: The Hindu Business Line -
IIT-Bombay study urges 0.08% UPI MDR, bank-funded payment pool
IIT-Bombay paper recommends cutting UPI MDR to 0.08% and having banks fund UPI from a CASA-based pool instead of an MDR revenue share.
Source: The Economic Times -
SBI flags 'jumped deposit scam' tricking users into high-value UPI approvals
SBI warns on the jumped deposit scam and urges customers to block numbers and trust only 1600-prefixed bank calls.
Source: LatestLY -
IIT-Bombay professors want UPI MDR cut to 0.08%, no bulk bank share
IIT-Bombay study recommends cutting UPI MDR from 0.40% to 0.08% and dropping banks' 70% bulk share, funded from CASA margins instead.
Source: ETBFSI (Economic Times)
Reporting fromThe Hindu ↗LiveMint ↗
Sources & verification2 sources · 4 claims
These are the records behind this briefing. Linked reporting is not the same as independent confirmation.
- The HinduReporting
Government, banks to decide subsidy amount for UPI that will continue after MDR comes in ↗
Published Sep 25, 2026 · Accessed Sep 26, 2026 - LiveMintReporting
Centre to ask banks' body to ensure consumers don't pay MDR on UPI payments ↗
Published Sep 25, 2026 · Accessed Sep 26, 2026
Claims and linked sources
MDR on UPI will go live on October 15, 2026, and the date is not expected to be pushed.
FY2026-27 budget keeps Rs 2,000 crore set aside for RuPay and low-value BHIM-UPI incentives.
Finance Ministry will sit with the banking industry to fix the subsidy's size and form.
Government sources say the 0.4 percent MDR will not be passed on to customers; banks will address user concerns.
