Govt Introduces 0.4% MDR on UPI Transactions Above ₹2,000

16 Sept 2026, 6:11 pm · 2h ago · 1 min read · YourStoryNew

The Government of India has introduced a 0.4% Merchant Discount Rate (MDR) on UPI merchant transactions exceeding ₹2,000, bringing an end to the zero-MDR regime active since 2020. Set to take effect on October 15, 2026, the fee must be borne by merchants, while transactions below ₹2,000—which account for roughly 96% of all merchant volumes—remain exempt. The move has sparked intense debate across the fintech sector, with industry leaders like PhonePe’s Sameer Nigam backing MDR for long-term sustainability, while other ecosystem players express concern over its potential impact on digital payments adoption.