UPI Merchant Fee Returns: Who Gets a Cut of the 0.4% MDR?
From October 15, 2026, UPI person-to-merchant transactions above ₹2,000 will attract a 0.4% Merchant Discount Rate, capped at ₹300 for payments of ₹75,000 and above, while consumers, P2P transfers, and small merchants (up to ₹1 lakh/month via QR) stay exempt. The fee — a first since UPI went zero-MDR in 2020 — will be split among the ecosystem's banks, NPCI, and payment providers rather than charged to shoppers, with mid-sized PSU banks estimated to gain ₹70-100 crore a quarter and larger banks nearly three times that.
