UPI MDR From October 15: SIPs, Insurance and OTT AutoPay to Face Different Treatment

The new merchant discount rate framework for UPI payments will take effect from October 15, 2026, but paying more than ₹2,000 will not automatically make every transaction chargeable. 

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The revised structure applies to specified person-to-merchant payments and treats recurring mandates, capital-market transactions and certain essential-sector payments differently. For customers, the position remains unchanged: MDR is a charge within the merchant payment system and will not be collected from the person making the UPI payment. 

That distinction matters for people who use UPI for mutual fund investments, insurance premiums, utility payments or subscription services. Whether MDR applies depends on how the payment is made and the category it falls under, rather than simply its value. 

Mutual fund SIPs through AutoPay remain outside prescribed MDR 

A recurring mutual fund SIP collected through UPI AutoPay will not attract the prescribed MDR under the new framework. 

UPI AutoPay supports recurring transactions across mutual funds, insurance, utility bills, mobile payments, EMIs and entertainment and OTT subscriptions. Payments already set up through such mandates are treated separately from a fresh UPI merchant transaction. 

A one-time mutual fund payment, however, falls under the framework for eligible capital-market transactions. Payments involving mutual funds, securities, stockbrokers and dealers will carry an MDR of 0.02%, capped at ₹300 per transaction. 

A monthly SIP running through an existing UPI mandate and a one-time UPI purchase of mutual fund units will therefore not receive the same treatment. 

Insurance payments get a separate ₹5 MDR 

Insurance transactions have their own rate under the revised structure. 

Specified insurance payments above ₹2,000 will carry an MDR of ₹5 per transaction instead of the standard 0.4% applicable to regular eligible person-to-merchant transactions. 

The ₹5 rate also applies to certain payments in railways, telecom, fuel and agricultural inputs. 

This does not mean the amount will be debited from the customer’s account as a separate UPI fee. For instance, a person paying a ₹50,000 annual insurance premium should not interpret the new framework as an automatic ₹200 charge on the payment. 

OTT and utility AutoPay transactions treated separately 

Recurring OTT subscriptions and utility payments made through UPI AutoPay also remain outside the prescribed MDR applicable to regular merchant transactions. 

The distinction lies in the payment route. A recurring payment collected through an existing mandate is treated differently from a new person-to-merchant transaction initiated by the user. 

As a result, the ₹2,000 threshold by itself does not determine whether MDR applies. 

Regular merchant payments above ₹2,000 face 0.4% MDR 

For regular eligible person-to-merchant UPI payments above ₹2,000, the new framework provides for an MDR of 0.4%. 

For transactions of ₹75,000 or more, the rate remains 0.4%, but the MDR is capped at ₹300. 

Other categories have their own structure. Eligible capital-market payments carry the lower 0.02% rate with a ₹300 ceiling, while specified insurance and essential-sector transactions above ₹2,000 carry the flat ₹5 MDR. 

Recurring UPI AutoPay transactions, meanwhile, remain outside the prescribed MDR. 

For users, this means the nature of the transaction becomes more important than the payment amount alone. A ₹3,000 regular merchant payment, a ₹3,000 mutual fund purchase and a ₹3,000 recurring AutoPay transaction can fall under different parts of the framework. 

The revised MDR structure follows an NPCI circular issued on September 15, 2026, and will come into effect from October 15, 2026. Customers themselves will continue to remain outside the MDR charge.