New UPI Rules 2026: Everything You Need to Know About the ₹2,000 Threshold

Are you in doubt about “Is there a limit on UPI transactions now?” after the Ministry of Finance and the National Payments Corporation of India (NPCI) declared new UPI rules?

The new 2026 UPI (Unified Payments Interface) rules: day-to-day payments within ₹2,000 are exempt from charges. Moreover, this rule also allows free Person-to-Person (P2P) transactions. This implies regular digital payments will continue without extra costs for consumers.

Starting 15th October 2026, eligible Person-to-Merchant (P2M) transactions exceeding ₹2,000 will be charged a Merchant Discount Rate (MDR). 

This guide explains the UPI new rules in 2026, the updated MDR framework, and the adjustments merchants need to make before October 2026.  

What Are the Updated UPI Rules in 2026?

The fundamental change in the new UPI rules in 2026 is the introduction of MDR on specific P2M UPI transactions above ₹2,000.

UPI processed approximately 24bn transactions totalling $311 in August 2026, dominated by apps like Google Pay and PhonePe. Maintaining this huge, expanding financial infrastructure is crucial, which is why compliance frameworks are being introduced in 2026.

The table below explains the UPI new rules in 2026 for better understanding.

How Does the New UPI MDR Framework Work?

Following the new UPI guidelines, the standard MDR Rate is 0.4%, with a maximum charge of ₹300 for transactions of ₹75,000 or more. Nonetheless, this rule does not apply to every UPI transaction. No MDR will be charged on P2P transactions or retail payments of ₹2,000 or less.

The table below shows some examples of the merchant discount rate in India for better understanding, highlighting the P2M UPI transaction fees.

The above examples are subject to the standard MDR rate. Also, transactions of ₹75,000 and above are restricted to the ₹300 cap.

For instance, if a qualifying merchant accepts a payment of  ₹40,000, the standard MDR will be ₹160. For any payment of ₹1,00,000, the MDR charge is subject to a maximum limit of ₹300.

Do Customers Need to Pay More at Shops Under the UPI Rule Changes 2026?

No, customers do not need to pay any additional fees or surcharge at shops or sellers under the UPI rule changes in 2026, starting from 15th October.

This means the MDR is a fee that merchants have to pay, not customers. If a shopkeeper illegally forces a UPI surcharge on your bill, you can just report it to the bank or the payment app.

The NPCI and the Government declared that passing UPI MDR to consumers is a criminal offence.

What Are the Special MDR Caps for Fuel, Utilities, and Share Markets?

As per the 0.4% UPI MDR framework, enacted by the Government of India and NPCI, there are some exceptions for sectors like commercial insurance and fuel.

The table below is a breakdown of the exceptions to the 0.4%  UPI MDR rule for transactions of ₹2,000:

Final Words

The UPI new rules in 2026 will bring new clarity to the digital payment world, while maintaining day-to-day transactions conveniently. The latest rules do not introduce any extra transaction fee for consumers.

Customers can continue their P2P transactions and merchant payments via UPI without paying any surcharge or platform fee. Starting from 15th of October 2026, eligible shopkeepers and merchants will be required to pay an MDR on specific payments which are above ₹2,000.

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FAQs

What is the latest news on UPI charges in India?

From 15 October 2026, India is initiating a 0.4% MDR on specified Person-to-Merchant (P2M) UPI transactions above ₹2,000. This amount is to be paid only by the merchant and cannot be imposed on consumers.

Is the ₹2000 rule applicable to every UPI app?

Yes, the new ₹2000 UPI rule is applicable uniformly across each of the authorised UPI apps like Google Pay, Paytm, PhonePe and BHIM. However, the UPI app providers will not be able to impose any additional fee or hidden charge on consumers to make UPI payments.

What is the maximum MDR for UPI transactions above ₹2,000?

The maximum MDR limit for standard UPI transactions above ₹2000 is restricted to ₹300 each transaction. This means a merchant making a transaction of ₹75,000 or above will pay the maximum amount of ₹300 under the standard 0.4% rate.

*Standard T&C Apply

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.