UPI charges from Oct 15: Paytm says new MDR will generate additional revenue

Paytm on Tuesday said the introduction of merchant discount rate (MDR) on select high-value UPI transactions will generate additional revenue from its merchant business.

The National Payments Corporation of India (NPCI) has introduced an MDR of up to 0.4% on UPI person-to-merchant (P2M) transactions exceeding ₹2,000.

The NPCI circular dated September 15 will come into effect from October 15, 2026.

"This will generate additional revenue from the merchant business for many of the payment transactions that were free earlier," One 97 Communications, which operates the Paytm brand, said in a regulatory filing.

The company stressed that there would be no charge on customers for UPI payments, which will continue to remain free.

Under the framework, a 0.4% MDR, capped at ₹300 per transaction, will apply to specified P2M UPI transactions above ₹2,000.

A flat MDR of ₹5 per transaction will apply to payments above ₹2,000 in specified sectors, including railways, telecommunications, insurance and fuel.

Transactions relating to mutual funds, securities, stockbrokers and dealers will attract a lower MDR of 0.02%, capped at ₹300 per transaction.

P2P transactions will continue to remain free irrespective of the amount transferred, while P2M transactions of up to ₹2,000 will remain outside the MDR framework.

Small merchants receiving up to ₹1 lakh a month through UPI QR payments under the person-to-person-merchant (P2PM) category will also continue to pay zero MDR.

The government said the new framework would affect about 4% of merchant transactions, leaving around 96% of P2M transactions unaffected.

The finance ministry said MDR is a charge within the merchant payment ecosystem and is not a charge on customers making UPI payments.

Banks have been advised to ensure merchants do not pass the MDR on to customers, while UPI application providers have been prohibited from imposing platform fees or hidden charges on UPI transactions.