UPI MDR Calculator

Do customers pay UPI MDR?

No. If you send ₹5,000 through UPI, ₹5,000 is the amount debited from you. The MDR shown by this calculator is an estimated charge inside the merchant-payment ecosystem; it is not added to your UPI payment.

The September 2026 framework also prohibits UPI apps from imposing platform fees or hidden charges on individuals. Banks have been advised to ensure merchants do not pass MDR on to customers.

UPI MDR rates in India

The rate depends on who receives the payment, what the payment is for and its value. These are the rules used by the calculator.

Source: Ministry of Finance, 15 September 2026. NPCI publishes its operational material on the official UPI circulars page.

What is UPI MDR and why is it charged?

Merchant Discount Rate, or MDR, is a payment-processing charge. It is neither a tax nor money collected by the Government or NPCI. Where MDR applies, it is shared among participants such as banks, payment service providers and UPI application providers.

The stated purpose is to support the operation, security and continued expansion of the UPI ecosystem while keeping P2P transfers, small payments and qualifying small merchants protected. The Government estimates that roughly 96% of merchant transactions remain unaffected.

P2P UPI transfers: always zero MDR

A person-to-person payment means money sent from one individual to another, such as paying a friend, splitting rent or sending money to family. The framework leaves every P2P transfer outside MDR, regardless of the amount. There is no percentage charge, transaction cap or monthly free-usage quota for the customer.

The recipient must genuinely be classified as a person. Paying a business through a merchant QR is a P2M transaction even if an individual owns the business.

Regular merchant payments: 0.4% above ₹2,000

For a normal shop, restaurant, online store or other merchant, payments up to and including ₹2,000 have zero MDR. Once the transaction is above ₹2,000, MDR is 0.4% of the full transaction value—not merely the portion above ₹2,000. The charge is capped at ₹300, so it stops rising once the payment reaches ₹75,000. Formula: lower of payment amount × 0.4% or ₹300.

These results say ‘up to’ because an otherwise ordinary-looking QR may belong to a merchant covered by the small P2PM exemption. The customer still pays no extra UPI charge in either case.

Small P2PM merchants: zero MDR exemption

Street vendors, neighbourhood shops and other qualifying small merchants receiving up to ₹1 lakh per month through UPI QR codes under the P2PM category continue to receive zero-MDR protection. The ₹1 lakh figure is a monthly receipt condition for the merchant, not a per-transaction customer limit.

Customers usually cannot see the merchant’s monthly receipts or acquiring classification. The calculator therefore shows the standard merchant MDR as an estimate and calls out this possible exemption.

Essential sectors: flat ₹5 above ₹2,000

Railways, telecommunications, insurance, fuel and agricultural inputs receive a special flat-rate treatment because they are essential or thin-margin sectors. Up to ₹2,000 the MDR is zero. Above ₹2,000 it is exactly ₹5, not 0.4% of the bill, and it does not increase with the transaction amount.

The merchant category must fall within the notified essential-sector classification. A business selling a related product is not automatically covered merely because its name sounds similar.

Mutual funds and stocks: 0.02% with a ₹300 cap

Payments relating to mutual funds, securities, stockbrokers and dealers use the lower capital-market MDR of 0.02%. The calculator applies the general zero-MDR protection up to ₹2,000, then multiplies the full payment by 0.02%. The ₹300 cap is reached at ₹15 lakh, because ₹15,00,000 × 0.02% equals ₹300.

MDR is separate from fund expense ratios, brokerage, securities transaction tax, stamp duty, exchange charges and other investment costs. This calculator estimates only the UPI MDR layer.

UPI AutoPay: zero MDR on recurring mandates

UPI mandates and AutoPay recurring transactions remain outside the prescribed MDR framework. That means a recurring debit does not inherit the 0.4% regular-merchant rate, the 0.02% capital-market rate or the ₹5 essential-sector charge. OTT subscriptions, utility bills, insurance premiums and mutual fund SIPs paid through UPI AutoPay continue with zero MDR, irrespective of the debit amount.

This zero-MDR treatment applies to the recurring AutoPay execution. A separate one-time UPI payment to the same merchant may fall under the ordinary merchant, essential-sector or capital-market MDR rule. Mandate limits, authentication requirements, failed-debit rules and bank penalties are separate from MDR and are not calculated here.

When did the UPI MDR framework change?

The Central Government issued a notification on 14 September 2026 confirming zero MDR for UPI transactions up to ₹2,000. NPCI issued its detailed circular on 15 September 2026 after deliberations by the UPI Steering Committee. The Ministry of Finance published its public explanation the same day.

Older articles may describe all bank-account UPI merchant payments as zero-MDR or discuss possible future charges. Check their publication date before using them as a current rate source.

Frequently asked questions