Updated: 11 October 2026
Status update — 11 October 2026
Reported proposal, not a confirmed change: Reports published on 8–9 October indicate that the planned 15 October 2026 introduction of merchant UPI MDR charges may be postponed to 1 January 2027. Moneycontrol reported on 9 October that the steering committee meeting was called off and the decision remained pending. As of this 11 October 2026 check, no final NPCI or government notification confirming a postponement has been verified. January 2027, including the reported 1 January proposal, remains unconfirmed; it is not a confirmed effective date.
Confirmed framework versus reported timing: The Department of Financial Services FAQ cited below states 15 October 2026 as the scheduled effective date. The framework summarised below is separate from the reported postponement proposal. Check a subsequent NPCI or government announcement and your acquiring bank before relying on the implementation date.
Reporting: Business Standard, 8 October 2026; ET Now, 8 October 2026. Moneycontrol, 9 October 2026. These news reports are not official notifications.
Quick answer: UPI remains free for people sending money to other people, and customers should not be charged for paying a merchant through UPI. The published Government of India framework gives 15 October 2026 as the scheduled start date, subject to the timing update above: it introduces merchant discount rate (MDR) for selected person-to-merchant transactions above ₹2,000, while keeping payments up to ₹2,000 and eligible small-merchant transactions outside MDR. MDR is a merchant-side payment-processing charge; it is not a customer fee.
What is UPI?
Unified Payments Interface (UPI) is an instant payment system developed by the National Payments Corporation of India (NPCI), an RBI-regulated entity. It lets users transfer money between bank accounts and pay merchants through participating apps. A UPI PIN authorises a debit from your account; it is not required to receive money.
Published merchant MDR framework and implementation status
The Ministry of Finance announced a new MDR framework for selected UPI merchant payments. The scheduled effective date stated in the official FAQ is 15 October 2026; the possible postponement reported on 8–9 October remains unconfirmed as of 11 October 2026.
| UPI transaction | Official position | Who pays? |
|---|---|---|
| Person-to-person (P2P) | Free, irrespective of the permitted amount | No customer or recipient charge |
| Merchant payment up to ₹2,000 | No MDR | No customer charge |
| Eligible P2PM small merchant receiving up to ₹1 lakh per month | Zero MDR under the stated framework | No customer charge |
| Standard P2M payment above ₹2,000 | 0.4% MDR; capped at ₹300 for transactions of ₹75,000 and above | Merchant-side ecosystem charge; it must not be passed to the customer |
| Specified essential/thin-margin sectors above ₹2,000 | Flat ₹5 MDR for listed categories such as railways, telecom, insurance, fuel and agricultural inputs | Merchant-side charge |
| Capital-market payments | 0.02% MDR, capped at ₹300 | Merchant-side charge |
Do not confuse MDR with a UPI transaction limit. A bank or NPCI limit is a security and risk-control ceiling. MDR is a merchant-side processing charge under the new framework.
Is the viral “₹1,999 payment splitting” idea valid?
No official source reviewed for this guide recommends splitting a genuine purchase into repeated ₹1,999 payments to avoid MDR. The customer should not be charged MDR in the first place, and the Ministry of Finance says merchants must not pass it on to buyers. Treat viral workarounds as unverified, do not structure payments to evade a merchant’s obligations, and ask the merchant or acquiring bank for the correct treatment.
UPI transaction limits
NPCI’s public FAQ states that normal UPI transactions generally have a ceiling of up to ₹1 lakh per transaction. Higher ceilings apply to specified categories; for example, some categories may allow up to ₹2 lakh, while IPO, Retail Direct and certain verified-merchant categories can permit higher amounts. Banks and apps may impose lower per-transaction or daily limits under their own risk policies. Always check the limit displayed by your bank or app before relying on a large transfer.
What to do when a UPI payment fails
- Check the transaction status in the UPI app and do not immediately pay again if the status is pending.
- Save the transaction ID, date, amount and beneficiary or merchant details.
- Raise a dispute through the UPI app or your bank.
- If your account was debited but the beneficiary was not credited, RBI’s failed-transaction framework provides for reversal by T+1 day. For a merchant payment where the account was debited but confirmation was not received, the stated outer limit is T+5 days.
- The RBI framework provides ₹100 per day for delay beyond the applicable outer limit. If redress is not provided, escalate through the RBI Complaint Management System/Integrated Ombudsman route after first approaching the regulated entity.
T means the calendar date of the transaction. The RBI circular describes these as outer limits and expects faster resolution where possible.
UPI safety checklist
- Never share your UPI PIN, OTP, card PIN, CVV or banking password.
- You do not enter a UPI PIN to receive money. Entering the PIN authorises a payment from your account.
- Do not scan an unknown QR code to receive a refund or prize.
- Verify the recipient name and amount before approving.
- Do not install remote-control or screen-sharing apps at an unsolicited caller’s request.
- Report unauthorised transactions to your bank immediately; faster reporting can affect customer liability.
For a broader business-control checklist, read APICSTOCK’s Cybersecurity for Small Businesses in India.
UPI & Digital Payments series
This pillar will anchor a focused APICSTOCK Money & Services cluster. Supporting guides will be published only when they add distinct, source-backed value:
- UPI MDR for merchants: framework and implementation updates
- UPI transaction limits by use case
- Failed UPI transactions, refunds and RBI escalation
- UPI Lite: limits, loading and safe use
- Personal UPI, merchant UPI and P2PM explained
- UPI scam prevention and unauthorised-transaction reporting
Official sources
- Department of Financial Services: FAQs on MDR on select UPI P2M transactions (15 September 2026)
- Press Information Bureau: UPI MDR clarification (15 September 2026)
- NPCI: UPI frequently asked questions
- RBI: failed-transaction turnaround time and compensation framework
- NPCI: fraud awareness
Keep APICSTOCK’s buying guides working for you
APICSTOCK Money & Services is an information pillar. Product discovery and Amazon buying guides remain APICSTOCK’s shopping pathway. If you run an online business, continue with the Amazon India seller guide or browse all buying guides and articles.
Editorial disclosure: APICSTOCK is not affiliated with RBI, NPCI, the Ministry of Finance, any bank or any UPI app. Rules, limits and implementation details can change. This guide cites official sources and shows its update date so readers can verify the latest position.