UPI MDR for Online Businesses: What to Change by 15 Oct

From 15 October 2026, eligible UPI payments to merchants above ₹2,000 carry a 0.4% merchant discount rate (MDR), capped at ₹300 per transaction. Payments up to ₹2,000 stay free, and small merchants who receive under ₹1 lakh a month through UPI are exempt. For UPI MDR for online businesses, the practical work is checking how your payment gateway passes the fee on, fixing your checkout and reports, and re-checking your margins.

This post is for owners and founders who sell through a website or app and take UPI. By the end you will know which of your orders are affected, what the fee costs per order, and what a developer needs to change.

What is changing in UPI MDR from 15 October 2026?

MDR is the fee a merchant pays to accept a card or UPI payment. Until now, ordinary UPI merchant payments carried no MDR. From 15 October, the National Payments Corporation of India (NPCI, the body that runs UPI) applies a 0.4% MDR to eligible person-to-merchant payments above ₹2,000, subject to a cap of ₹300 on each transaction.

The main points as reported by SCC Online’s explainer of the NPCI FAQs (16 September 2026) and Business Today (22 September 2026):

• Payments up to ₹2,000 have zero MDR.

• Transfers between people (P2P) stay free.

• Merchants receiving up to ₹1 lakh a month through UPI are exempt.

• Some sectors (railways, telecom, insurance, fuel) pay a flat ₹5 per transaction. Customers are not charged directly. The merchant pays.

• Business Today reports that transactions below ₹2,000 are more than 96% of UPI merchant volume, based on government data cited by NPCI.

A further report, APAC News Network (25 September 2026), says recurring UPI AutoPay payments are excluded. Reports differ on a few edge cases, so treat your payment gateway’s written notice as the final word for your account.

What does the UPI MDR mean for online businesses?

It depends on your order values and your monthly UPI volume. A business selling ₹300 snacks or ₹999 courses is mostly outside the fee. A business selling ₹8,000 appliances, ₹40,000 packages or ₹1.5 lakh services is inside it.

Here is how common cases fall, based on the rules above:

If you collect UPI through a payment gateway on your website, ask the gateway in writing how it classifies your account. Gateways have their own pricing on top of any NPCI rule, and we do not know your contract. whether gateway-collected UPI on websites is treated the same as QR payments under the exemption

How much will 0.4% UPI MDR cost on a typical order?

The arithmetic is simple. The fee is 0.4% of the payment, up to ₹300. Business Today also reports that 18% GST applies on the fee itself, not on the order value. A GST-registered merchant can claim input tax credit on that GST.

These are worked examples from the published rule. They are not Ureka prices.

On a ₹10,000 order, the fee is ₹40, which Business Today also uses as its example. The cap means large orders are cheaper in percentage terms. A ₹2 lakh payment pays the same ₹300 as a ₹75,000 one.

Want a fixed number for your project? Send 3–4 lines on WhatsApp and get a written quote within 48 hours.

Can I pass the UPI MDR on to my customer?

Not as a separate charge, according to the NPCI FAQs as reported by SCC Online. Merchants are not permitted to pass MDR on to customers, and customers continue to pay only the listed price. So a “UPI convenience fee” line at checkout is risky.

What you can do is review the listed price itself. If your margin on a ₹6,000 product is thin, a ₹24 fee plus GST on the fee matters. That is a pricing decision for you, not a checkout trick.

What should my website or app change before 15 October?

Most of the work is small and sits in three places: the payment flow, the reports, and the invoices. A developer can audit all three from your order export. typical time for this audit

1. Settlement reconciliation. If the gateway deducts MDR before paying you, the money in your bank will be lower than the order total. Your order system should record gross amount, fee, GST on fee and net amount, so your accountant is not matching mismatched numbers by hand.

2. Checkout display. Show the listed price only. Do not add a UPI fee line. If you want customers to prefer another method, offer a clear discount on that method instead, and check the rule with your gateway first.

3. Payment method order. Some businesses will want to show card, netbanking and wallets alongside UPI. Do this only if the all-in cost really differs for your order values. Check the numbers before changing a flow that already converts well.

4. Failure and refund handling. A refunded order should have a clear rule on whether the fee is returned. Ask your gateway and record it in your system. gateway refund treatment of MDR

5. GST records. If you are GST-registered, the GST on the fee is an input credit. Your accountant needs it listed separately in exports

If your site or app has no order dashboard at all, now is the time to add one. A custom website or web app built for your business can record these amounts per order and export them for your accountant. If you sell through an Android or iOS app, the same recording applies to mobile app development.

Which orders should I look at first?

Pull your last three months of UPI orders and sort by value. Count how many are above ₹2,000 and add up the monthly UPI total. That one sheet tells you whether you are in the exempt group, how many orders are exposed, and how much the fee will be on a normal month.

Two groups tend to feel it most: businesses with a few high-value orders (B2B supplies, equipment, packages) and businesses with thin margins. Subscription businesses may be less affected if AutoPay is excluded, but confirm that with the gateway.

If the fee is small compared with your margin, change nothing except the reports. If it is not, look at price, minimum order value, or payment mix, in that order.

What does it cost to update a website or app for the UPI MDR?

Ureka quotes a business website from ₹4,999, a web application from ₹9,999, and an Android and iOS app from one codebase from ₹14,999. A complete app system, with orders, payments, reports and an admin panel, runs ₹2.5–10 lakh. Other Indian guides quote ₹2–25 lakh for apps. For general ranges, read our app development cost guide for india.

An audit and a few reporting changes on an existing build is a much smaller job than a new one. We quote it as a fixed written price after one call. CONFIRM: starting price for a payment-reporting update on an existing site The client owns the code, domain, store accounts and data from day one, so a change we make does not tie you to us.

Do I need a new payment gateway because of UPI MDR?

Probably not. The rule changes what a merchant pays on certain UPI payments. It does not change how a gateway connects to your site. Most businesses will keep their gateway and adjust their reports and prices.

Compare gateways only if your all-in cost across UPI, cards and netbanking is clearly out of line for your order values. Look at the total fee, settlement time, refund handling and support, not only the headline rate. A developer can connect whichever gateway you

What is the next step?

Check three things this week. Is your monthly UPI total above ₹1 lakh? How many orders are above ₹2,000? What does your gateway’s written notice say? Then decide whether you need a reporting update or a pricing change. If you want a developer to look at your checkout, send us the details.

Frequently asked questions

Is there a UPI charge for customers from 15 October 2026?

No. According to the NPCI FAQs as reported by SCC Online, customers are not charged and continue to pay only the listed price. The 0.4% MDR is paid by the merchant, and only on eligible merchant payments above ₹2,000, subject to a cap of ₹300 per transaction. Payments between people stay free.

Which UPI payments are exempt from MDR?

Payments up to ₹2,000 are exempt, person-to-person transfers stay free, and small merchants receiving up to ₹1 lakh a month through UPI are exempt. Recurring UPI AutoPay payments are reported as excluded. Some sectors such as railways, telecom, insurance and fuel pay a flat ₹5 per transaction instead.

How much is the UPI MDR on a ₹10,000 payment?

At 0.4%, the MDR on a ₹10,000 payment is ₹40. Business Today reports that 18% GST applies on the fee, which adds ₹7.20, so the total cost to the merchant is ₹47.20. A GST- registered merchant can claim input tax credit on that GST.

Can I add a UPI fee at checkout on my website?

The NPCI FAQs, as reported by SCC Online, say merchants are not permitted to pass MDR on to customers, and customers continue to pay only the listed price. A separate UPI feeline at checkout is therefore risky. Review your listed prices instead, and confirm the rule with your payment gateway.

Do I need to change my payment gateway because of the UPI MDR?

Usually not. The rule changes what merchants pay on some UPI payments, not how a gateway connects to your website or app. Check your gateway’s written notice, compare total costs across UPI, cards and net banking for your order values, and change gateway only if the numbers are clearly out of line.

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