UPI Merchant Charges on Payments Above ₹2,000
Published: 3 October 2026 · Updated: 16 October 2026
UPI payments above ₹2,000 are not automatically subject to the new 0.4% MDR right now. The merchant MDR framework that was originally scheduled to start on 15 October 2026 was deferred by NPCI on 13 October.
NPCI says MDR on select Person-to-Merchant (P2M) UPI transactions will be implemented immediately after Diwali, on a date to be notified separately. Until that revised implementation date is officially notified and the framework is put into effect, a payment does not become chargeable under this new MDR merely because it crosses ₹2,000.
Are UPI Payments Above ₹2,000 Free Right Now?
For the new MDR framework announced in September 2026, the rollout has not yet started. The original 15 October effective date was overtaken by NPCI's 13 October postponement.
This does not mean that every possible UPI-linked payment product has identical rules. Credit-linked UPI products, for example, operate under separate product rules. But for the direct account-to-merchant MDR framework covered by the September announcement, the new 0.4% merchant MDR should not be treated as active before the revised rollout date.
How Long Will UPI Payments Above ₹2,000 Remain Without This MDR?
NPCI has not provided a precise number of days. It says implementation will be immediately after Diwali and that the date will be notified separately.
So the answer is not “until January”, “until the end of the month” or any other unofficial date. The new MDR remains pending until the separate implementation date is officially announced.
Track the timing at UPI MDR New Date: When Will Merchant Charges Start?
What Is the ₹2,000 Rule Once the Framework Starts?
The Department of Financial Services FAQ says there is no impact on small-value UPI P2M transactions up to ₹2,000. The standard 0.4% MDR is described for qualifying P2M transactions above ₹2,000.
The official transaction examples also show ₹2,000 with MDR of ₹0 and ₹3,000 with MDR of ₹12. That means the threshold is not a deduction where only the amount above ₹2,000 is charged. Once a qualifying transaction is above the threshold, the standard percentage is calculated on the transaction value, subject to the applicable category rules.
Is the 0.4% Charged Only on the Amount Above ₹2,000?
No. The official example of a ₹3,000 qualifying payment produces ₹12 of MDR:
₹3,000 × 0.4% = ₹12
If MDR applied only to the ₹1,000 above the threshold, the result would be ₹4. The government's own example therefore shows that the standard percentage is applied to the full qualifying transaction value once the transaction is above ₹2,000.
What Happens at ₹75,000 and Above?
The published framework caps the standard MDR at ₹300 per transaction for payments of ₹75,000 and above. For example, 0.4% of ₹1,00,000 would mathematically be ₹400, but the official framework caps the MDR at ₹300.
Again, these are the published framework rules for when implementation begins; they did not become operative on the originally scheduled 15 October date.
Does Every Merchant Payment Above ₹2,000 Use 0.4%?
No. Merchant account categorisation matters. The official FAQ separately describes zero-MDR treatment for qualifying P2PM small merchants and special treatment for specified merchant categories.
It also lists a flat ₹5 MDR above ₹2,000 for specified categories such as railways, telecom services, insurance and fuel, among others. Capital-market transactions have a separate 0.02% framework with a ₹300 maximum.
So “above ₹2,000” is only one part of the test. The payment type and merchant category must also be considered.
Do Customers Pay the MDR?
No. The official FAQ says UPI remains free for consumers and merchants cannot pass the MDR to buyers while accepting UPI payments. The customer pays the posted price; MDR, when applicable under the framework, is a merchant-side payment acceptance cost.
Payments Above ₹2,000 FAQs
Is There a 0.4% UPI Charge Above ₹2,000 Today?
The new 0.4% MDR framework is not yet in force because its rollout was deferred before the original 15 October start date.
Will ₹2,001 Be Charged Once the Framework Starts?
If the payment is a qualifying P2M transaction under the standard category, it is above the ₹2,000 threshold. The exact treatment still depends on the merchant category and applicable framework rules.
Is ₹2,000 Itself Charged?
No. The official FAQ's example shows ₹2,000 with MDR of ₹0.
Official Position
The current timing comes from NPCI's 13 October 2026 post-Diwali implementation statement. The rate, threshold and cap details come from the Department of Financial Services MDR FAQ.