DriversRecommendedOutdated drivers can make a good PC feel brokenScan driver issues before chasing fixes manually.Scan NowOctober DealsAmazon USOctober deal check: compare before you payAmazon US: current deals, useful picks and tech finds.Check DealsPC HealthRecommendedCrashes, freezes, slowdowns? Check your PC nowSpot repairable issues before they interrupt work.Check PC×
Skip to content
The Finance Base
The Money Desk · Blog
Re:

How to Calculate UPI Payment Costs and MDR for Your Business

Learn how to calculate announced UPI MDR by transaction, check small-merchant and category exemptions, and keep gateway fees separate from MDR.
From TheFinanceBase Team4 min to read
Special offer. See more information about Outbyte and uninstall instructions. Please review EULA and Privacy policy.

For covered standard merchant UPI payments above ₹2,000 and below ₹75,000, the announced MDR is 0.4% of the transaction amount. At ₹75,000 and above, it is capped at ₹300 per transaction. But that is not a blanket charge on every UPI payment: exemptions, merchant category and separate gateway or service fees can change your actual cost. The Department of Financial Services FAQ gives 15 October 2026 as the effective date; this guide reflects policy information current as of 4 October 2026, before that date.

Calculate the MDR for each transaction

For a covered standard person-to-merchant (P2M) payment, apply the rate and cap as follows:

  • Up to ₹2,000: zero MDR.
  • Above ₹2,000 and below ₹75,000: transaction amount × 0.004 (0.4%).
  • ₹75,000 and above: calculate 0.4%, then cap the MDR at ₹300 per transaction.

For example, ₹10,000 × 0.004 = ₹40. A ₹100,000 payment produces ₹400 before the cap, so the MDR is ₹300. The official FAQ also gives ₹3,000 → ₹12 and ₹50,000 → ₹200. These figures apply to covered standard P2M transactions, not every UPI payment. Ministry of Finance announcement; Department of Financial Services FAQ.

Check whether an exemption or special rate applies

P2P and small merchants

Person-to-person (P2P) transfers remain free. Merchant P2M transactions up to ₹2,000 also remain free. The Ministry says qualifying small merchants in the P2PM category—those receiving up to ₹1 lakh per month through UPI QR—continue to have zero MDR on all transactions. For a qualifying P2PM merchant, a payment above ₹2,000 does not alone trigger the standard rate. Check the category assigned by the acquiring bank; do not infer eligibility from one payment. Ministry of Finance announcement; Department of Financial Services FAQ.

Special offer. See more information about Outbyte and uninstall instructions. Please review EULA and Privacy policy.
#1 Best Overall
Square Terminal - Credit Card Machine to Accept All Payments | Mobile POS
  • With Square Terminal, you can ring up sales, accept payments, and print receipts, all with one device. Use it at the counter or ring up customers anywhere in your store.
  • Accept all major credit and debit cards and pay one low rate with no hidden fees and no long-term contracts.
  • Process chip cards in just two seconds.
  • Get your money as soon as the next business day.
  • Use it cordlessly with the built-in battery, designed to last all day.

Specified merchant categories

For payments above ₹2,000, the FAQ lists a flat ₹5 MDR per transaction for railways, telecommunications, insurance, fuel and other specified essential or thin-margin sectors. Payments related to mutual funds, securities, stockbrokers and dealers have a 0.02% MDR capped at ₹300. Confirm the acquiring bank’s merchant category and the transaction’s classification before applying either special rate. Department of Financial Services FAQ.

Direct account payments versus credit-linked UPI

The framework described in the FAQ concerns direct user-account-to-merchant-account UPI payments. Credit-linked UPI follows separate credit-product rules, so do not apply these calculations to it without checking the relevant product terms. Department of Financial Services FAQ.

Rank #2
SumUp Solo Credit Card Payment Card Reader with Charging Station. Full Touch-Screen Interface with Free SIM Card and Mobile Data (SumUp Solo)
  • An intuitive interface to easily accept payments and manage your sales.
  • Strong, reliable Wi-Fi connection. Free SIM card and mobile data so you can process payments anywhere.
  • Great battery capability with an additional charging station.
  • A truly portable device. Stay in control of your business, wherever you go.
  • Support when you need it. Get in touch with our US-based support through phone, email and chat.

Separate MDR from gateway and service fees

MDR is the transaction-level charge under the framework. A payment gateway or aggregator may also charge a platform or service fee under its own contract. Those are separate cost lines, and a provider’s advertised rate is not a universal UPI fee or a substitute for your written quote.

Published example What the provider page states
Razorpay UPI gateway Standard 2% platform fee; GST applicable; no one-time setup or annual maintenance fee shown on that plan. Razorpay pricing page.
Cashfree Lists 1.95% and displays a time-limited offer for eligible new merchants. Its terms describe platform fees as separate from payment-instrument fees and mutually agreed. Cashfree pricing page.

Before using a provider’s rate in a forecast, confirm which transaction channel it covers, the fee base, promotion eligibility and end date, settlement timing or charges, refund treatment and applicable taxes. Public pricing pages do not determine negotiated terms for a particular merchant.

Special offer. See more information about Outbyte and uninstall instructions. Please review EULA and Privacy policy.
Rank #3
Dejavoo Z8 EMV CTLS Credit Card Terminal (IP, WiFi, no Dial)
  • Includes Elavon encryption
  • Chip Card / EMV / NFC Compatible
  • 2.4’’ Color LCD with backlight
  • 192 MB of Memory (128 MB RAM / 64 MB DDR RAM)
  • Includes terminal and power supply

Build a realistic monthly cost estimate

  1. Classify each payment bucket. Separate P2P from P2M, direct account-funded payments from credit-linked UPI, and standard merchants from P2PM-eligible or special-category merchants.
  2. Apply the correct MDR rule. Use 0.4% and the ₹300 cap only for covered standard P2M payments. Use the applicable zero-MDR or special-category treatment for the rest.
  3. Add provider charges separately. Apply the provider’s contracted fee only to the transactions or services it covers. Add other charges and taxes only where confirmed in the contract or current price schedule.
  4. Sum the buckets. Multiply the number or value of transactions in each bucket by its applicable MDR, then add the relevant gateway and service charges.
  5. Calculate the blended rate if useful. Divide total UPI acceptance cost by UPI sales volume. Use a representative distribution of ticket sizes: a single headline rate can overstate costs when many payments are exempt or capped.

For a business comparing acceptance routes, assess in-person QR and website or app gateway costs separately. Also compare category eligibility, thresholds and caps, provider fees and offer conditions, settlement terms, and the reporting, refund, reconciliation and integration features the business needs. Existing physical QR stands may continue to be used under the FAQ; a holder can help display a QR in person but does not change MDR or replace a provider-issued QR. Department of Financial Services FAQ.

Keep merchant costs separate from customer pricing

The Ministry of Finance says: “MDR is a charge within the merchant payment ecosystem. It is not a charge on customers making UPI payments.” Its 15 September 2026 release says banks have been advised to ensure merchants do not pass MDR on to customers. Treat the cost as part of the merchant’s acceptance expense, not as a UPI fee to add to a customer’s bill. Ministry of Finance release, 15 September 2026.

Rank #4
Clover Compact Payment Terminal - Requires New Merchant Processing Account Through Powering POS.
  • The Clover Compact and Clover Mini /Station sync with each other through the Clover Dashboard and cloud-based network. This allows you to manage transactions, track sales, and access business data across both devices seamlessly. Plug in, not battery/mobile. Requires New Processing account through Powering POS. (US, PR, USVI). CANNOT be used with a different Processor. Rate match guarantee. Contact us for questions
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Support on Ko-Fi

What the 96% estimate means

The Ministry’s 2026 release estimates that 96% of P2M transactions will remain unaffected and says about 4% of merchant transactions will attract MDR under the announced framework. This is the government’s estimate based on its data analysis, not an independently measured result or a forecast of any particular business’s costs. Your bill depends on transaction mix, category classification and provider terms. Ministry of Finance announcement.

Quick Recap

Bestseller No. 1
Square Terminal - Credit Card Machine to Accept All Payments | Mobile POS
Square Terminal - Credit Card Machine to Accept All Payments | Mobile POS
Process chip cards in just two seconds.; Get your money as soon as the next business day.; Use it cordlessly with the built-in battery, designed to last all day.
$298.99
Bestseller No. 2
SumUp Solo Credit Card Payment Card Reader with Charging Station. Full Touch-Screen Interface with Free SIM Card and Mobile Data (SumUp Solo)
SumUp Solo Credit Card Payment Card Reader with Charging Station. Full Touch-Screen Interface with Free SIM Card and Mobile Data (SumUp Solo)
An intuitive interface to easily accept payments and manage your sales.; Great battery capability with an additional charging station.
$99.00
Bestseller No. 3
Dejavoo Z8 EMV CTLS Credit Card Terminal (IP, WiFi, no Dial)
Dejavoo Z8 EMV CTLS Credit Card Terminal (IP, WiFi, no Dial)
Includes Elavon encryption; Chip Card / EMV / NFC Compatible; 2.4’’ Color LCD with backlight
$228.00
Bestseller No. 5
Square Handheld - Portable POS - Credit Card Machine to Accept Payments for Restaurants, Retail, Beauty, and Professional Services
Square Handheld - Portable POS - Credit Card Machine to Accept Payments for Restaurants, Retail, Beauty, and Professional Services
Slim, pocketable, and lightweight so you can accept payments wherever your customers are.
$399.00
Best Value
Square Handheld - Portable POS - Credit Card Machine to Accept Payments for Restaurants, Retail, Beauty, and Professional Services
  • With Square Handheld, you can accept payments, take tableside orders, or scan barcodes anywhere. With a slim design and comfortable grip, the POS is easy to carry in your palm or pocket. Square Handheld is designed to withstand water splashes and dust. Add an optional protective case for accidental drops. A long-lasting battery and offline payments let you keep selling.
  • Slim, pocketable, and lightweight so you can accept payments wherever your customers are.
  • Take tableside orders, bust lines, or use the built-in barcode scanner, all with one sleek device.
  • A battery that can power through your shift and offline payments let you keep selling, even if your internet is down.
  • Accept all major credit and debit cards and pay one simple rate with no hidden fees and no long-term contracts required.

Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.

What’s actually slowing this PC down?

Pick the symptom - the matching free tool is one click away.

Special offer. See more information about Outbyte and uninstall instructions. Please review EULA and Privacy policy.

Leave a Reply

Your email address will not be published. Required fields are marked *

Special offer. See more information about Outbyte and uninstall instructions. Please review EULA and Privacy policy.

More post from the Money Desk

  1. The Money DeskBlogTheFinanceBase09 OCT 267 minMortgage Escrow FAQs: Taxes, Insurance, Shortages, and Refunds
  2. The Money DeskBlogTheFinanceBase09 OCT 265 minHow Mortgage Escrow Accounts Work and What Homeowners Pay For
  3. The Money DeskBlogTheFinanceBase09 OCT 265 minHow to Read a Stock Chart, Volume and Market-Cap Data
Recommended PC Tool
Recommended PC Tool
Crashes, No Sound, or Screen Glitches?Free driver scan
Windows Errors? Fix Them Before They SpreadFree repair scan

Two free Windows tools

One Free Minute Could Fix That PC

Before you go - each of these free tools takes about a minute and tackles what quietly slows a Windows PC down.

Special offer. View Outbyte info, uninstall instructions, EULA, and Privacy Policy.