UPI MDR 2026: what the 0.4% merchant charge means if you sell on WhatsApp
NPCI plans a 0.4% merchant discount rate on person-to-merchant UPI payments above ₹2,000, capped at ₹300 from ₹75,000 upwards. Customers and person-to-person transfers stay free, and small P2PM merchants receiving up to ₹1 lakh a month are exempt. It was due on 15 October 2026 but was deferred on 13 October to a date after Diwali, still to be notified.
- The planned charge is 0.4% on person-to-merchant UPI payments above ₹2,000, capped at ₹300 per transaction from ₹75,000.
- Payments of ₹2,000 or less are not affected, and NPCI says they are more than 95% of merchant UPI volume.
- Customers pay nothing extra, and UPI apps are not allowed to add a platform fee on UPI payments.
- Micro merchants in the P2PM category receiving up to ₹1 lakh a month through UPI QR stay at zero MDR.
- NPCI deferred the 15 October 2026 start to after Diwali, with the new date to be announced separately.
What NPCI announced, and what changed on 13 October
On 15 September 2026 NPCI published FAQs on a merchant discount rate (MDR) for select UPI payments. MDR is the fee a merchant's side of the payment chain pays for accepting a payment. Until now, standard UPI merchant payments have carried zero MDR. The framework was set to take effect on 15 October 2026.
On 13 October 2026, NPCI's UPI and Services Steering Committee deferred it, citing the festive season. NPCI said the charge will be implemented after Diwali, which falls on 8 November this year, on a date to be notified separately. Reports say the framework has not been withdrawn. This article is general information, not financial or tax advice. Check NPCI's own announcements before you change prices.
The rules in one table
| Payment type | Planned charge |
|---|---|
| Person to merchant, up to ₹2,000 | No MDR |
| Person to merchant, above ₹2,000 | 0.4% of the amount |
| Person to merchant, ₹75,000 and above | Capped at ₹300 per transaction |
| Person to person, any amount | Free for both sides |
| Small merchants (P2PM) receiving up to ₹1 lakh a month via UPI QR | Zero MDR |
| UPI AutoPay mandates (recurring payments) | No prescribed MDR |
| Customers paying | No charge, and UPI apps may not add a platform fee |
NPCI's FAQ also explains the P2PM limit: a merchant that receives more than ₹1 lakh a month through UPI for three consecutive months is moved to the regular P2M category. For comparison, the same FAQ says credit card MDRs typically run from 1.5% to 2.5% and debit card MDRs are capped at up to 0.90%.
Why NPCI says the charge is needed
NPCI's FAQ gives three reasons. First, UPI handles enormous volume: it cites 2,451 crore transactions worth ₹29.9 lakh crore in August 2026 alone. Second, it says government subsidies were meant as short-term bridge funding, not a permanent way to pay for servers, fraud prevention and bank support. Third, the money is meant to stay inside the UPI ecosystem and fund resilience, cybersecurity and customer service.
The FAQ also describes a dedicated fund, paid for from the MDR, to support UPI acceptance among small merchants in Tier 3 to 6 towns, the North East, Jammu and Kashmir and Ladakh. NPCI says its detailed framework will be finalised with the Reserve Bank of India within three months. Whatever you think of the reasoning, the practical point for a seller is simple: plan as if the charge will arrive, and watch for the date.
What it costs on typical WhatsApp orders
Here is the planned rate applied to illustrative order values. These are examples, not quotes from any gateway.
| Order value | Planned MDR |
|---|---|
| ₹1,499 kurta | ₹0 |
| ₹2,000 exactly | ₹0 |
| ₹5,000 saree | ₹20 |
| ₹18,000 gold coin | ₹72 |
| ₹80,000 jewellery order | ₹300 (cap) |
If your average order is under ₹2,000, as it is for many food, apparel and personal care sellers, very little changes. If you sell furniture, jewellery, electronics or courses, budget for it. Remember that this would sit alongside whatever your payment gateway already charges. Gateways price their own platform fees separately, and how they will show the new MDR had not been published on the pages we checked. Ask your gateway in writing.
What sensible sellers do before the new date
- Find out your category. Ask your bank or gateway whether your UPI acceptance is classed as P2PM or P2M. A small home business on a personal UPI QR may stay exempt.
- Look at your order mix. Pull last quarter's orders and count how many were above ₹2,000. That number, times 0.4%, is your rough monthly cost.
- Do not split orders artificially. Breaking one ₹6,000 order into three is poor customer experience and may breach gateway or network rules.
- Use AutoPay for repeat billing. NPCI says UPI AutoPay mandates carry no prescribed MDR, which suits subscriptions and memberships.
- Do not surcharge customers yet. NPCI says consumers will not be charged, and it has not said merchants can pass the fee on.
- Compare with cash on delivery honestly. COD avoids the MDR but brings returns, failed deliveries and cash handling. Weigh a ₹20 charge on a ₹5,000 prepaid order against what one returned COD parcel costs you, including shipping both ways.
- Brief your team. Customers will ask whether UPI now costs extra. Give staff and your chatbot one clear, correct answer.
Collecting UPI payments in chat on Convo360
Most WhatsApp sellers collect payment with a link. Convo360 is a flat-fee chat and calling platform that connects to your own Razorpay account, so payments go straight from Razorpay to your bank with no markup from us.
- In the Flow Builder, confirm items and the total with a Buttons step, then add the Razorpay payment link block with the amount from a variable such as order_total.
- Set a payment trigger so a successful payment starts a confirmation flow that thanks the customer and shares the dispatch timeline.
- Use a Save CRM lead step to store the order value, so you can see at month end how many orders crossed ₹2,000.
Read how to send Razorpay payment links on WhatsApp for the full setup, Razorpay's published charges for gateway fees, and our guide to UPI payment options inside WhatsApp.
Example conversation
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Frequently asked questions
Will customers pay a charge on UPI payments above ₹2,000?
No. NPCI's FAQ says UPI stays free for consumers, and UPI apps may not add any platform fee on UPI payments. The planned 0.4% MDR applies only on the merchant's side of person-to-merchant payments above ₹2,000.
When does the UPI MDR start?
It was due on 15 October 2026. On 13 October NPCI deferred it, saying it will be implemented after Diwali on a date to be notified separately. As on 21 October 2026, we could not find an official new date, so check NPCI's announcements.
Are small shops exempt from the UPI MDR?
Merchants in NPCI's P2PM category, who receive up to ₹1 lakh a month through UPI QR into their own accounts, stay at zero MDR. If inward UPI credit exceeds ₹1 lakh for three consecutive months, the merchant moves to the regular P2M category.
Is there a maximum UPI MDR on large payments?
Yes. For person-to-merchant payments of ₹75,000 and above, NPCI's framework caps the MDR at ₹300 per transaction. Below that, the charge is 0.4% of the amount for payments above ₹2,000, so a ₹10,000 payment would carry ₹40.
Do UPI AutoPay subscriptions attract the new MDR?
NPCI's FAQ says recurring UPI mandates, known as AutoPay, do not carry prescribed MDR charges. This covers payments such as utility bills, OTT subscriptions and recurring investments set up as standing instructions.
Official sources
- NPCI: FAQs on Merchant Discount Rate (MDR) on select UPI (P2M) transactions, dated 15 Sep 2026 (checked 21 Oct 2026)
- The Week: NPCI defers UPI MDR until after Diwali, 13 Oct 2026 (checked 21 Oct 2026)
Related reading
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