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No public evidence in the sources reviewed confirms that a memo asking the Prime Minister to revise a UPI MDR limit was submitted. The Ministry of Finance has, however, published a framework for merchant discount rates (MDR), with charges reported to begin on October 15, 2026. That date is still in the future as of October 4, 2026.
Was a memo to the Prime Minister submitted?
The claim in the headline remains unverified: the available sources do not identify a memo, its author, a submission date, an acknowledgment from the Prime Minister’s Office, or the change it requested. It should not be treated as a confirmed submission without a primary document or credible report establishing those details.
The policy framework itself is documented. On August 8, 2026, the Ministry of Finance said the NPCI-headed “UPI and Services Steering Committee” would decide whether to set MDR after Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026. Parliament subsequently passed the Bill, and the Ministry described a framework in a release dated September 15. PRS Legislative Research reports that the charges are scheduled to start on October 15, 2026. The August 8 Ministry release reflects the position at that date; it is not the later framework. The September 15 Ministry release and PRS India’s September policy review describe the newer position. The start date remains a scheduled date, not an already-effective charge.
What MDR framework has been announced?
The Ministry’s September 15 summary describes MDR as a merchant-side charge on specified UPI merchant transactions. Its listed rates and exemptions are:
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| Payment or merchant category | Framework described by the Ministry |
|---|---|
| Person-to-person (P2P) | Free irrespective of transaction amount. |
| Person-to-merchant (P2M) up to ₹2,000 | Zero MDR. |
| Small merchants in the P2PM QR category | Zero MDR on all transactions for merchants receiving up to ₹1 lakh per month through UPI QR. |
| Eligible P2M transactions above ₹2,000 | 0.4% MDR, capped at ₹300 for transactions of ₹75,000 or more. |
| Specified essential or thin-margin sectors | Flat ₹5 MDR on transactions above ₹2,000 in railways, telecommunications, insurance, fuel, and agricultural inputs. |
| Specified capital-market payments | 0.02% MDR, capped at ₹300, for payments relating to mutual funds, securities, stockbrokers, and dealers. |
These are figures and categories in the Ministry’s public summary, not an independent calculation of charges for every merchant or transaction. A merchant’s classification matters: the P2PM small-merchant exemption is tied to the stated monthly receipts and UPI QR category, while the sector-specific rates apply to named categories.
Who pays MDR, and does it mean UPI users will be charged?
MDR is an acceptance charge associated with merchants, not a transaction fee automatically charged to the person paying. The Ministry says MDR is distributed among payment ecosystem participants, including banks, payment service providers, and UPI application providers; it is not a government or NPCI tax. It also says banks have been advised to prevent merchants from passing MDR to customers and that UPI application providers are prohibited from imposing platform fees or hidden charges. The official releases use phrases such as “No Charges for UPI Users,” but the detailed framework is about merchant-side MDR and its stated customer safeguards.
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The Ministry says approximately 4% of merchant transactions will attract MDR, while approximately 96% of P2M transactions will remain unaffected. It also says P2P, which it describes as representing 70% of total transaction value, remains outside MDR. These proportions are claims made by the Ministry in its release, not independently recalculated estimates.
What does “MDR limit” mean—and what it does not mean
MDR and a UPI transaction limit answer different questions. MDR is the merchant-side acceptance charge described above. A transaction limit is the maximum amount allowed in a payment; a customer-facing fee is yet another matter. The announced MDR rates do not themselves set the maximum amount a person can send.
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For example, the Reserve Bank of India’s August 2024 monetary policy release raised the UPI limit for tax payments from ₹1 lakh to ₹5 lakh per transaction. NPCI’s August 2025 circular raised per-transaction ceilings in named verified-merchant categories while retaining banks’ discretion to set internal limits within NPCI ceilings. Those are transaction ceilings, not MDR rates: RBI’s August 2024 release and NPCI’s August 2025 circular.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why does the government say it is introducing MDR?
The Ministry cites UPI sustainability, continued investment in cybersecurity and fraud prevention, infrastructure upgrades, ecosystem expansion, and reduced reliance on subsidies. It says the UPI Steering Committee considered rates, operations, and consumer safeguards. These are the government’s stated reasons; the public sources cited here do not independently establish that a particular rate is necessary or demonstrate its effect on merchant costs, payment acceptance, consumer behaviour, or competing payment methods.
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The Ministry also describes a dedicated small-merchant adoption fund, to which an amount equivalent to 5% of MDR collections would be contributed. That is the contribution described in the release; it is not a stated 5% charge on each transaction.
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What to check if you are a customer or merchant
- As a customer: distinguish a merchant-side MDR from a fee shown to you at checkout. The Ministry says customers should not be charged MDR and says platform fees or hidden charges by UPI application providers are prohibited.
- As a merchant: check whether you are classified under P2PM, whether your monthly UPI QR receipts meet the stated ₹1 lakh threshold, and whether your business falls into one of the named sector categories. Those details determine which listed treatment is relevant.
- Before relying on an effective date: note that PRS reports October 15, 2026, while the date is future as of October 4, 2026. The September Ministry release is the source for the detailed rates; the PRS review is the source for the reported start date.
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