Is UPI transaction MDR fee zero for merchants in India?

Not universally, from 15 October 2026. P2P stays free. P2M of ₹2,000 or less stays free. Small QR merchants up to ₹1 lakh/month stay free. Other P2M above ₹2,000 may take 0.4% MDR (not a tax), capped at ₹300. RuPay credit-card-on-UPI remains a separate interchange product.

What is the MDR fee for RuPay Credit Cards on UPI?

Transactions below ₹2,000 made via RuPay credit cards on UPI are completely fee-free (0% MDR). For transactions exceeding ₹2,000, interchange fees as per NPCI circulars (up to 2% depending on merchant category) apply and are borne by the merchant.

How much money do payment gateways charge compared to UPI QR?

Standard payment gateways (Razorpay, Cashfree, Paytm PG) charge 2.0% + 18% GST (total 2.36%) on credit card and net banking transactions. Switching to direct UPI QR eliminates these fees.

Merchant Savings Toolkit

UPI Transaction Fee & MDR Savings Calculator

Compare 2.36% gateway fees with direct UPI after 15 October 2026. Typical bills of ₹2,000 or less still cost the merchant nothing. Larger P2M tickets take 0.4% MDR (capped at ₹300) — still far cheaper than a card gateway.

Merchant savings calculator

What you keep if that card/gateway mix moved to direct UPI after 15 Oct 2026 (0.4% MDR on P2M above ₹2,000).

Need the fee on one bill? Use the UPI MDR calculator.

P2P stays free. P2M of ₹2,000 or less stays free. Small QR shops under ₹1 lakh/month stay free if tagged P2PM. Other P2M above ₹2,000 may take 0.4% MDR from 15 October 2026, capped at ₹300.

Yearly savings vs gateway

If that card mix moved to direct UPI

₹11,328.00

Gateway 2.36% minus UPI MDR on the same volume — typical bills are under ₹2,000, so UPI MDR is ₹0.

Card/PG volume₹40,000.00/mo

Gateway MDR (2.36% with GST)₹944.00/mo

UPI MDR if that volume moved₹0.00/mo

Still cheaper than a gateway₹11,328.00/yr

Create a free UPI QR poster Open MDR calculator

Understanding UPI MDR Regulations in India

The Merchant Discount Rate (MDR) is the fee charged by banks and payment processors to merchants for accepting digital payments. Here is how UPI compares against traditional card networks:

Payment Method	MDR Rate	GST (18%)	Fee on ₹10,000 Sale
Direct UPI QR ≤ ₹2,000 / small QR shop	0.00%	₹0	₹0
Direct UPI P2M above ₹2,000 (from 15 Oct 2026)	0.40% (cap ₹300)	18% on the MDR	₹40 + GST on a ₹10,000 ticket
RuPay Credit Card on UPI (< ₹2,000)	0.00%	₹0	₹0
Visa / MasterCard Credit Cards	2.00%	0.36%	₹236
Payment Gateway (Razorpay/Paytm)	2.00%	0.36%	₹236

Related tools

Four siblings in this topic — the full inventory lives on the hub.

UPI error code resolver

NPCI returned error? Look up U16, Z9, ZM and 40+ sourced codes.

Open →

Indian bank UPI limits

Daily caps for 30+ banks, last-reviewed with NPCI-facing sources.

Open →

UPI QR validator & decoder

Safety-check the VPA, amount, and tamper clues before you trust or reprint.

Open →

UPI MDR calculator (Oct 2026)

0.4% P2M above ₹2,000, small-merchant exemption, GST on MDR.

Open →

Related guides

Picked from the article collection by shared tags.

NPCI QR Code vs BHIM QR vs Bharat QR: What Is the Difference?

What an NPCI QR code is, how it differs from a BHIM QR and a bank-issued Bharat QR, and why NPCI has no official website that prints shop QR codes.

Read guide →

P2M Full Form & Meaning in Banking and UPI

P2M meaning and full form in UPI and banking: how it differs from P2P, refund days, Oct 2026 MDR, and when a shop needs a merchant VPA.

Read guide →

P2PM Small Merchant: Who Stays Free on UPI MDR

Banks tag small QR shops as P2PM. GSTIN is not required. Three months over ₹1 lakh moves you to 0.4% MDR. How to check PhonePe, GPay, and your bank before 15 Oct 2026.

Read guide →

UPI MDR from 15 Oct 2026: What Merchants Actually Pay

Headlines said UPI tax. From 15 Oct 2026 merchants pay 0.4% MDR on some P2M payments above ₹2,000. P2P and small QR shops stay free. Rates, GST, and a calculator.

Read guide →

Browse topics →