From 15 October 2026, UPI is no longer free for every merchant. Under the NPCI circular of 15 September 2026, person-to-merchant (P2M) payments above ₹2,000 carry a merchant discount rate of 0.4%, capped at ₹300 per transaction; fuel, railways and telecom pay a flat ₹5; and small merchants receiving up to ₹1 lakh a month through UPI QR (P2PM) pay nothing. This calculator turns those rules into a monthly rupee figure for your shop — by category, ticket size and volume — including the 18% GST on the fee and the input credit you can claim back.
The rules the calculator applies
| Merchant category | MDR from 15 October 2026 |
|---|---|
| P2PM small merchant (UPI QR receipts ≤ ₹1 lakh/month) | Nil, on every transaction |
| P2M merchant, transaction ≤ ₹2,000 | Nil |
| P2M merchant, transaction > ₹2,000 | 0.4% of the amount, capped at ₹300 (cap reached at ₹75,000) |
| Fuel, railways, telecom (essential category), > ₹2,000 | Flat ₹5 |
| GST | 18% on the MDR, claimable as ITC if your GSTIN is on the PSP account |
Consumers pay nothing extra, and merchants may not add a surcharge for UPI. What the circular says, who is exempt and how petrol pumps and traders reacted is in UPI MDR starts 15 October: what the NPCI circular actually says.
How to use the calculator
- Pick your category: P2PM, P2M, essential (flat ₹5), or custom if your PSP has quoted a different rate or cap.
- Enter a typical transaction amount and the number of transactions per month above ₹2,000.
- Read the MDR per transaction, the monthly fee, the GST on it, the ITC you recover, and the effective cost as a percentage of UPI sales.
- Change the ticket size to see where the ₹300 cap starts to help (above ₹75,000 the effective rate falls below 0.4%).
- Use the figure in the profit margin calculator as a per-unit payment cost.
Worked examples
- Kirana, average bill ₹600: almost every transaction is below ₹2,000 and receipts are under ₹1 lakh a month → ₹0.
- Boutique, average bill ₹4,500, 300 bills a month above ₹2,000: 0.4% × 4,500 = ₹18 per bill + ₹3.24 GST → about ₹6,400 a month, of which ₹970 comes back as ITC. Effective cost ≈ 0.47% of those sales.
- Electronics dealer, ₹85,000 average: MDR capped at ₹300 (0.35%) + ₹54 GST per sale.
- Petrol pump, ₹3,000 fill: flat ₹5 + ₹0.90 GST — 0.2%, well below card MDR.
What to do before 15 October
- Confirm your tag with your PSP (PhonePe, Paytm, BharatPe, your bank). Receipts under ₹1 lakh a month should be P2PM with zero MDR; get it in writing.
- Put your GSTIN on the PSP account so the monthly MDR invoice supports ITC.
- Reprice, do not surcharge. If high-ticket margins are thin, revise the price list — a "2% extra on UPI" board breaks the rules and loses sales.
- Keep the standee up. UPI remains cheaper than cards (1–2%) and far cheaper than cash handling; refresh yours with the UPI QR standee.
- Reconcile monthly: MDR is deducted from settlements; match the PSP statement to your payment receipts.
The shop-level checklist, including how to talk to customers about it, is in UPI MDR is here: how to prepare your shop. The full background — categories, history, and what is still being litigated — is in the UPI MDR 2026 complete guide.
Related tools
- UPI MDR 2026 complete guide — every rule, category and exemption, with worked examples by merchant type.
- UPI QR standee — keep accepting UPI at the counter.
- Payment receipt — dynamic QR with the exact amount.
- Profit margin calculator — MDR as a per-unit cost.
- GST calculator — the 18% on the fee and the ITC.