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The government has announced a Merchant Discount Rate (MDR) on certain UPI transactions, with a charge of up to 0.40 per cent on payments above Rs 2,000. The new framework is set to come into effect from October 15, 2026.
The announcement has raised questions among UPI users and merchants about who will actually bear the cost and whether customers will have to pay extra for using UPI.
PhonePe CEO Sameer Nigam, in an interaction with India Today’s sister channel, Aaj Tak, clarified that UPI will remain completely free for customers. The MDR will apply only to specified merchant transactions and will not be directly charged to consumers. Here’s what all he said: