UPI MDR FAQs: What happens to QR payments, AutoPay, SIPs and utility bills? Key things every UPI user must know

The National Payments Corporation of India (NPCI) has introduced a new Merchant Discount Rate (MDR) framework for select UPI transactions, effective 15 October 2026. While the move introduces a 0.4% charge on specified merchant transactions above ₹ 2,000, NPCI has clarified that consumers will not be charged for making UPI payments.

NPCI stated in the FAQs released with the circular that UPI apps will not charge a platform fee, consumers will not face monthly limits on free UPI transactions and merchants cannot pass the MDR on to buyers.

No. NPCI clearly said consumers will not be charged for scanning a QR code and making a UPI payment. This applies to QR payments at local markets, street vendors and small retail shops.

The NPCI document states that the customer-facing side of a QR transaction will have zero fees, regardless of the purchase amount.

The MDR is instead a merchant-side charge. For standard Person-to-Merchant (P2M) UPI transactions above ₹ 2,000, the MDR will be 0.4%, with a maximum charge of ₹ 300 for transactions of ₹ 75,000 and above.

For example, on a ₹ 3,000 purchase, the merchant-level MDR would be ₹ 12. On a ₹ 50,000 transaction, it would be ₹ 200. For a ₹ 1 lakh transaction, the 0.4% calculation would be ₹ 400, but the merchant would pay only the ₹ 300 cap.

No. NPCI said individual consumers will not face any monthly quota, volume limit or tiered cap on free UPI transactions.

Users can continue making P2P and P2M UPI payments without reaching a monthly fee threshold. NPCI also clarified that daily transaction limits imposed by banks or NPCI for security and risk management are different from commercial charging limits.

Person-to-person payments will continue to be free, including transfers to family and friends, bill splitting and transfers between a user's own linked bank accounts.

No. NPCI clearly stated that UPI app providers will not charge a platform fee or any other charge for payments made through UPI.

This means the introduction of merchant-side MDR does not create a new platform fee for consumers under the framework.

No. NPCI stated that merchants onboarded under the framework cannot pass the MDR charge on to customers when accepting UPI payments.

Consumers are to pay only the posted price for the product or service.

NPCI also stated that merchants absorb nominal digital payment processing costs as part of their operating expenses and that consumers will continue paying the listed price.