More Stories

Informist, Wednesday, Sept. 16, 2026

NEW DELHI – The Reserve Bank of India has termed the introduction of merchant discount rate on payments above INR 2,000 using unified payments interface "an important step". The central bank said it will help UPI in continuing to scale-up, innovate, and serve Indian consumers and businesses.

"The introduction of MDR (merchant discount rate) on large-value UPI transactions (above INR 2,000) is an important step towards strengthening the long-term sustainability of India's digital payments ecosystem," the RBI said in a post on X Tuesday. "A fair and appropriate distribution of MDR across ecosystem participants will support continued investment in technology, infrastructure, and acceptance networks."

The central bank's statement came in the wake of the government announcing the imposition of a merchant discount rate of 0.4% on merchant payments of over INR 2,000 using UPI starting Oct. 15. While the person-to-person transactions will remain completely free, the RBI iterated. "P2M (Person-to-Merchant) UPI transactions below INR 2,000 will continue to remain free for merchants, while MDR may be levied on merchants for P2M," the RBI said. The rollout of the merchant discount rate on transaction of certain value will can enable wider acceptance of UPI as well as deepen the customer base and support sustained growth in transaction volumes, it said.

The new merchant discount rate will apply only to specified person-to-merchant transactions above INR 2,000, with the rate capped at INR 300 for transactions of INR 75,000 and above, according to a government release. 

Further, the RBI said it is committed to ensure that UPI continues to be safe, seamless, affordable, and accessible. Tuesday, the government had clarified that the merchant discount rate was not a tax or a charge collected by the government or National Payments Corp. of India. Instead, it will be distributed among participants in the payment ecosystem, including banks, payment service providers, and UPI application providers, to support the operation and expansion of the UPI ecosystem. Only about 4% of merchant transactions would attract a merchant discount rate, the government said, leaving the majority of payments unaffected with the recently announced step.  End

Reported by Shweta

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2026. All rights reserved.