UPI MDR Is Back? Your Free Payments May End

The government wants to change a law that currently bans any fee on UPI payments. If MDR returns, merchants — and possibly you — could pay a small charge every time you tap and pay.

Here's what happened: The Union government has proposed amending Section 10A of the Payment and Settlement Systems Act, 2007, which currently bans any direct or indirect charge on UPI transactions.. The amendment, part of the Taxation and Other Laws (Amendment) Bill 2026, would replace the blanket prohibition with a selective exemption, letting the government notify specific payment modes where fees can apply.. MDR on UPI was removed in January 2020 to boost digital payment adoption; banks and payment networks have since lobbied repeatedly for its reintroduction to recover infrastructure costs..

What you should do: Check whether your bank or UPI app has announced any new fee structure for peer-to-merchant payments — most will email or notify you 30 days before any charge goes live.. Compare your monthly UPI transaction volume now so you can estimate your potential fee burden if MDR is set at even 0.25% — a merchant doing ₹5 lakh in monthly UPI sales would pay ₹1,250 extra per month.. If you run a small business or accept UPI payments, review your pricing margin today and decide whether you will absorb MDR or adjust your menu or invoice prices before any rule kicks in..

RuPay credit cards on UPI already attract 2% MDR today — meaning the fee mechanism is live. If MDR returns on debit UPI, expect it to start around 0.25–0.50% on merchant transactions, not person-to-person transfers.

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