The biggest UPI change of 2026 is a 0.4% merchant discount rate (MDR) on select merchant payments above ₹2,000, capped at ₹300 per transaction. It was due to start on 15 October 2026, but NPCI deferred it on 13 October until just after Diwali, with the date to be announced. UPI stays free for users, and person-to-person transfers carry no charge. Separately, the on-device biometric limit rose from ₹5,000 to ₹10,000 from 7 August 2026.
UPI has been free for users and merchants for years. In 2026, the rules around it started to change in several ways at once: a planned merchant fee, a higher biometric limit, tighter security and a new consolidated rulebook.
This guide explains each change, who it affects and what is still pending. Every figure comes from NPCI circulars, official statements or major news reports.
UPI New Rules 2026: Key Statistics
What Are the New UPI Rules in 2026?
| Rule | What changed | Status |
|---|---|---|
| Merchant discount rate (MDR) | 0.4% on select merchant payments above ₹2,000, capped at ₹300 | Announced 15 Sep 2026; deferred to just after Diwali |
| Biometric approval limit | ₹5,000 raised to ₹10,000 per transaction (NPCI circular OC-226A, 3 July 2026) | Live since 7 Aug 2026 |
| RBI authentication framework | New digital-payment authentication rules with a dynamic security factor | Applicable from 1 Apr 2026 |
| UPI Consolidated Circular v1.0 | NPCI merged its operating circulars up to 31 July 2026 into one rulebook | Issued 18 Sep 2026 |
| Inactive UPI IDs and numbers | Disabled after one year of inactivity | Part of the consolidated circular |
| Merchant QR requirements | Revised rules for QR codes issued or replaced from 1 December 2026 | Upcoming |
| 30% market-share cap | Limit on any single third-party UPI app’s share of volume | Deadline 31 Dec 2026, unless NPCI revises it |
Will UPI Be Charged in 2026?
No, not for users. NPCI and the government have said consumers will not pay a separate UPI transaction or platform fee. The new MDR is a cost on the merchant side, and only for select payments above ₹2,000.
- Person-to-person (P2P) transfers stay free at any amount.
- Merchant payments up to ₹2,000 carry zero MDR.
- Payments to small vendors, classed as P2PM (peer-to-peer merchant), remain free of MDR.
- UPI app providers will not add a platform fee for users.
What Is the New UPI MDR and When Does It Start?
MDR stands for merchant discount rate, the fee a merchant pays to accept a payment. It was zero on UPI for about six years. The new framework applies it to select person-to-merchant (P2M) payments.
It was due on 15 October 2026. On 13 October, NPCI said it would start immediately after Diwali, “keeping in mind the festive season”. The new date has not been announced yet.
How much MDR applies to each payment type?
| Payment type | MDR | Who bears it |
|---|---|---|
| Person-to-person (P2P) | 0% | Nobody, it is free |
| Merchant payment up to ₹2,000 | 0% | Nobody, it is free |
| Small vendor (P2PM) | 0% | Nobody, it is free |
| Select merchant payment above ₹2,000 | 0.4% | Merchant |
| Select merchant payment of ₹75,000 or more | 0.4%, capped at ₹300 | Merchant |
Example: how much would a merchant pay?
| Payment amount | Calculation | MDR charged |
|---|---|---|
| ₹1,500 | Below the ₹2,000 threshold | ₹0 |
| ₹5,000 | 0.4% of ₹5,000 | ₹20 |
| ₹50,000 | 0.4% of ₹50,000 | ₹200 |
| ₹75,000 | 0.4% of ₹75,000 | ₹300 |
| ₹1,00,000 | 0.4% would be ₹400, so the cap applies | ₹300 |
These figures are our own arithmetic from the announced rate and cap. The customer pays only the purchase amount in every case.
Why was the MDR deferred?
NPCI cited the festive season. Trade bodies had raised concerns, and UPI volumes dipped 1.8% in September to 24.07 billion from August’s record 24.51 billion. Before the decision, there was also speculation that the rollout could slip to January 2027.
What Are the UPI Transaction Limits in 2026?
The general UPI limit has not changed. It is ₹1 lakh for standard transfers, with higher limits for certain merchant categories. Your bank or app can set a lower cap.
| Type of payment | Limit |
|---|---|
| Standard UPI transfer | ₹1 lakh per transaction and per day |
| Selected verified merchant categories (e.g. tax, insurance, travel) | Up to ₹5 lakh per transaction and ₹10 lakh per day |
| On-device biometric approval | ₹10,000 per transaction |
| UPI Lite | ₹1,000 per payment, ₹5,000 wallet balance |
| UPI 123Pay (feature phones) | ₹10,000 per transaction |
| UPI Circle (full delegation) | ₹5,000 per payment, ₹15,000 per month |
The higher merchant limits came from an NPCI circular that took effect on 15 September 2025. The biometric figure is not a new overall cap. It applies only to payments you approve with a fingerprint or face unlock.
How Does the New Biometric UPI Limit Work?
With on-device biometric authentication, you approve an eligible UPI payment using your phone’s fingerprint or face unlock instead of typing the UPI PIN. From 7 August 2026, this works for payments up to ₹10,000, double the earlier ₹5,000.
What security checks come with it?
- You must give fresh consent after device binding before biometric payments work.
- Banks are expected to switch biometric mode off if you change your UPI PIN, so you must opt in again.
- NPCI has also required key rotation and inactivity controls.
- Availability depends on your bank and UPI app, so check the settings in your app.
What Else Is Changing for UPI Users and Merchants?
- One rulebook: NPCI’s UPI Consolidated Circular v1.0 (18 September 2026) merges its operating circulars up to 31 July 2026.
- Inactive IDs: UPI IDs and UPI numbers that stay inactive for a year will be disabled.
- New QR rules: merchant QR codes issued or replaced from 1 December 2026 must meet revised requirements.
- App concentration: the 30% cap on any single third-party app’s share of volume has a current deadline of 31 December 2026.
Who Is Affected by the New UPI Rules?
| Group | What it means |
|---|---|
| Everyday users | No fee on UPI. You may use biometric approval for payments up to ₹10,000. |
| Small vendors (P2PM) | Payments stay free of MDR. |
| Merchants and businesses | Expect 0.4% on select payments above ₹2,000 once the MDR starts, capped at ₹300. |
| Banks and UPI apps | Must follow the consolidated circular, QR rules and biometric controls. |
What Should You Do Now?
For everyday users
- Keep your UPI app and phone software updated.
- Check your bank’s own daily limit in the app, since it may be lower than NPCI’s ceiling.
- Be wary of messages claiming you must pay a “UPI charge”. Consumers are not being charged.
For merchants
- Review which of your sales fall above ₹2,000 and estimate the cost at 0.4%.
- Ask your bank or payment provider how the MDR will be applied and settled.
- Plan to replace or update your QR code if it is reissued after 1 December 2026.
Strong finances help with every payment method. See our guide to improving your CIBIL score to 750+, and our explainer on how 5G works, since UPI depends on a reliable mobile connection.
For official updates, check NPCI and the Reserve Bank of India.
Key Takeaways
- ✓UPI remains free for users, and P2P transfers carry no charge.
- ✓A 0.4% MDR on select merchant payments above ₹2,000 (capped at ₹300) was deferred on 13 October and will start just after Diwali, on a date to be announced.
- ✓Merchant payments up to ₹2,000 and payments to small vendors stay free of MDR.
- ✓The on-device biometric approval limit is ₹10,000 per transaction since 7 August 2026.
- ✓New QR rules apply from 1 December 2026, and the 30% app-share cap deadline is 31 December 2026.
FAQs: UPI New Rules 2026
What are the new UPI rules in 2026?
The main changes are a planned 0.4% merchant discount rate on select payments above ₹2,000, a higher ₹10,000 biometric approval limit, an RBI authentication framework from 1 April 2026, a consolidated NPCI circular and new merchant QR rules from 1 December 2026.
Will UPI be charged from 15 October 2026?
No. NPCI deferred the merchant discount rate on 13 October until just after Diwali. UPI remains free for users, and P2P transfers carry no charge.
What is the new UPI MDR?
It is a 0.4% merchant discount rate on select person-to-merchant payments above ₹2,000, capped at ₹300 for payments of ₹75,000 and above. The merchant side bears it, not the customer.
When will the UPI MDR start?
NPCI says it will start immediately after Diwali, on a date to be notified separately. It was originally scheduled for 15 October 2026.
What is the UPI transaction limit in 2026?
The standard limit is ₹1 lakh. Selected verified merchant categories allow up to ₹5 lakh per transaction and ₹10 lakh per day. Your bank may set a lower limit.
What is the new biometric UPI limit?
From 7 August 2026, payments approved with on-device fingerprint or face unlock can go up to ₹10,000 per transaction, up from ₹5,000.
Are UPI payments to individuals free?
Yes. Person-to-person transfers carry no MDR or fee at any amount under the current framework.
Will small shops be charged the new fee?
Merchant payments up to ₹2,000 carry zero MDR, and payments to small vendors classed as P2PM remain free of MDR.
