September 17th 2026, New Delhi: Shri Nirmal K Minda, President, ASSOCHAM, appreciates the new UPI framework for large value merchant transactions. It will strengthen UPI sustainability, support innovation, mitigate frauds and enhance wider acceptance.
The framework will support payment infrastructure and acceptance networks enabling UPI to expand further and serve consumers and businesses across the country.
ASSOCHAM appreciates the Government’s balanced approach which keeps all person-to-person (P2P) UPI transactions completely free, irrespective of the amount transferred. Merchant payments up to ₹2,000 will also remain free of MDR.
The framework provides continued zero MDR support to eligible small merchants, including street vendors and neighbourhood businesses receiving up to ₹1 lakh per month through UPI QR codes under the P2PM category. This will help protect micro and small businesses from additional payment costs.
In India, there are more than 3 crore Micro units who will not face any MDR charges for UPI transactions as their monthly turnover is less than 1 Lakh.
Importantly, around 96% of merchant transactions will remain unaffected with MDR applying to only about 4% of P2M transactions. This will ensure that the vast majority of everyday merchant payments continue without any MDR impact.
For specified merchant transactions above ₹2,000, an MDR of 0.4% will apply which is capped at ₹300 for transactions of ₹75,000 and above. Essential and thin margin sectors such as railways, telecommunications, insurance, fuel and agricultural inputs will attract a flat MDR of ₹5 on transactions above ₹2,000.
For capital market transactions, including mutual funds, securities, stockbrokers and dealers, the MDR will be 0.02%, capped at ₹300 per transaction, supporting continued digital adoption in formal financial markets.
The framework also provides for a dedicated fund, with 5% of total MDR collections, to promote UPI adoption among small merchants and support wider acceptance, particularly across rural and semi urban areas.
By creating a sustainable revenue mechanism while protecting consumers and small merchants, the framework can support greater investment in innovation, infrastructure and payment acceptance. This will further strengthen UPI’s role in driving India’s digital transformation, said Shri Nirmal K. Minda.
The framework will support UPI’s continued growth while strengthening its reach, innovation and infrastructure. It will help in building a more sustainable and inclusive digital payments ecosystem.
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