UPI MDR: Rail Tickets, Insurance, Fuel, Telecom Payments Above Rs 2,000 To Face Rs 5 Flat Fee

Last Updated:September 15, 2026, 8:46 PM IST

UPI MDR from October 15: Railways, insurance, fuel, telecom and other sectors will face a flat Rs 5 MDR on transactions above Rs 2,000. Here’s why.

The government said the concessional structure is intended to provide cost certainty for critical public services and businesses operating on narrow margins.

The new UPI Merchant Discount Rate (MDR) framework will not impose the standard 0.4% charge across all merchant transactions. From October 15, transactions above Rs 2,000 in several specified sectors, including railways, telecommunications, insurance, fuel and agricultural inputs, will attract a flat MDR of Rs 5 per transaction.

The government said the concessional structure is intended to provide cost certainty for critical public services and businesses operating on narrow margins. The standard MDR for specified P2M transactions above Rs 2,000 is 0.4%, while transactions of Rs 75,000 and above will carry a maximum MDR of Rs 300.

Here is how the special sector-wise structure works.

Railways: Rs 5 MDR above Rs 2,000

UPI transactions for railway payments above Rs 2,000 will attract a flat MDR of Rs 5 instead of the standard 0.4% rate. The concessional treatment is part of the framework for essential sectors and is intended to provide greater cost certainty for critical public services.

Telecom: Rs 5 MDR above Rs 2,000

Telecommunications transactions above Rs 2,000 will also attract a flat Rs 5 MDR. This means the merchant-side processing charge will not rise in proportion to the value of a qualifying transaction, as it would under the standard percentage-based MDR.

Insurance: Rs 5 MDR above Rs 2,000

Insurance premium payments above Rs 2,000 will attract a flat Rs 5 MDR per transaction. The NPCI FAQ says the concessional structure is intended to prevent high backend payment costs on high-value annual or semi-annual insurance payments while supporting digital collections.

Fuel: Rs 5 MDR above Rs 2,000

UPI payments for fuel purchases above Rs 2,000 will attract a flat Rs 5 MDR. Fuel payments below Rs 2,000 will remain at zero MDR. The flat rate is intended to protect petrol pump operators from higher percentage-based processing costs on larger refuelling transactions.

Agricultural inputs: Rs 5 MDR above Rs 2,000

Transactions involving agricultural inputs above Rs 2,000 are also included among the sectors eligible for the flat Rs 5 MDR. The government has grouped these transactions with other essential and thin-margin sectors under the concessional structure.

What about electricity and other utility bills?

Public utility payments, including electricity, municipal water charges and piped natural gas, will also get a concessional treatment. For payments above Rs 2,000, the MDR will be Rs 5 per transaction, rather than 0.4%. Transactions below Rs 2,000 will have zero MDR.

Why a flat Rs 5 charge instead of 0.4%?

The government said the flat MDR for essential and thin-margin sectors is intended to provide cost certainty. Under a percentage-based structure, the MDR rises as the transaction value increases. A flat Rs 5 charge, on the other hand, keeps the processing cost fixed for qualifying payments regardless of the transaction amount.

“Transactions above Rs 2,000 in essential and thin-margin sectors, including railways, telecommunications, insurance, fuel and agricultural inputs, will attract a flat MDR of Rs 5 per transaction. The flat charge will provide cost certainty for critical public services and businesses operating on narrow margins,” the finance ministry said in a statement on September 15.

For consumers, however, MDR is not supposed to become a separate payment charge. The government has clarified that MDR is a charge within the merchant payment ecosystem and that merchants cannot pass it on to customers.

For specified P2M transactions above Rs 2,000, the standard MDR will be 0.4%. For transactions of Rs 75,000 and above, the MDR will be capped at Rs 300 per transaction. The new framework takes effect from October 15, 2026.

The government said MDR will be distributed among payment ecosystem participants, including banks and payment application providers, to support the operation and continued expansion of UPI.

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What are the new UPI MDR rules for transactions above Rs 2,000 in essential sectors?

Starting October 15, 2026, UPI transactions above Rs 2,000 in specified essential and thin-margin sectors will attract a flat Merchant Discount Rate (MDR) of Rs 5 per transaction. This flat rate replaces the standard 0.4% MDR to provide cost certainty for critical public services and businesses operating on narrow margins. The affected sectors include railways, telecommunications, insurance, fuel, agricultural inputs, and public utilities like electricity, municipal water, and piped natural gas.

Will customers have to pay the new Rs 5 UPI MDR charge when booking train tickets or buying fuel?

No, customers will not have to pay this charge. The government and the National Payments Corporation of India (NPCI) have clarified that the MDR is an internal charge within the merchant payment ecosystem. Merchants are strictly prohibited from passing these MDR charges on to customers, meaning consumers will only pay the posted price of the service or product.

How does the new UPI MDR framework affect automatic payments like OTT subscriptions and mutual fund SIPs?

According to the National Payments Corporation of India (NPCI), UPI AutoPay and recurring mandates are exempt from the new transaction charges. This means automated recurring payments for OTT streaming subscriptions (such as Netflix or Amazon Prime), monthly utility bills, and mutual fund SIPs will not attract the prescribed MDR.

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Mohammad HarisDeputy News Editor (Business)

Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalis…Read More

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