Starting 15 October 2026, merchants will pay a 0.4% charge on eligible UPI transactions above ₹2,000. This new fee applies only to merchants, not customers. NPCI said, "UPI remains the most affordable digital payment acceptance tool for commercial enterprises." This capped rate stays cheaper than traditional debit or credit card charges.

With the UPI merchant discount rate (MDR) set to apply from 15 October 2026, merchants will pay a 0.4% charge on eligible person-to-merchant (P2M) UPI transactions above ₹2,000. The charge will apply to the merchant and not to the customer making the payment.

But how does this UPI MDR compare with the charges merchants typically pay when customers use debit or credit cards? Here is what you need to know.

Credit card MDRs can vary depending on factors such as the card network, merchant category, and agreements between banks and merchants. The actual rate charged to a merchant may therefore differ across transactions.

By setting the baseline UPI MDR at 0.4% on transactions above ₹2,000 and capping it at ₹300 for high-value purchases, UPI remains the most affordable digital payment acceptance tool for commercial enterprises, NPCI noted.

If the same ₹10,000 payment is made through a debit card at an MDR of 0.90%, the merchant charge would be ₹90.

At a credit card MDR of 1.5%, the charge would be ₹150. If the credit card MDR is 2.5%, the charge would rise to ₹250.

For any UPI payment above ₹75,000, the merchant will still pay a maximum MDR of ₹300.

For comparison, on a ₹75,000 payment, a 0.90% debit card MDR would cost the merchant ₹675. A credit card MDR of 1.5% would amount to ₹1,125, while a 2.5% MDR would cost ₹1,875.

Therefore, even at higher transaction values, the capped UPI MDR results in a lower merchant charge than the debit and credit card MDRs.