India UPI Transactions Dip 1.8% in September Amid MDR Rollout
The National Payments Corporation of India reported 24.07 billion transactions last month, a slight fall from August, as a new fee structure for merchants takes effect on October 15.
India's UPI Transactions Dip in September
India's Unified Payments Interface (UPI) processed 24.07 billion transactions in September 2026, a 1.8% reduction from the 24.51 billion recorded in August, according to the National Payments Corporation of India (NPCI). Despite this monthly dip, transaction volume grew 23% year-on-year.
The total value of these transactions reached ₹29.37 lakh crore last month, an 18% increase from the previous year. NPCI data also showed daily averages of 802 million transactions, valued at approximately ₹97,913 crore.
New Merchant Discount Rate Framework
A new Merchant Discount Rate (MDR) framework for UPI transactions is set to begin on October 15, 2026. This revised structure introduces tiered fees while maintaining free person-to-person (P2P) transactions and person-to-merchant (P2M) payments up to ₹2,000. Small merchants collecting under ₹1 lakh monthly for three consecutive months will also remain exempt.
For P2M transactions exceeding ₹2,000, a standard 0.4% MDR will apply, capped at ₹300 for payments of ₹75,000 or more. Specific sectors like utilities and education will face a flat ₹5 fee above ₹2,000, while mutual fund and stock brokerage payments will incur a 0.02% MDR, also capped at ₹300.
Merchant Concerns and Dialogue
The proposed 0.4% MDR on larger P2M transactions has raised concerns among India's trading community. A delegation from the Confederation of All India Traders (CAIT), led by Secretary General Praveen Khandelwal, met Union Finance Minister Nirmala Sitharaman on Wednesday to discuss these issues.
Following constructive discussions, the All India Consumer Products Federation (AICPDF) and the All India Mobile Retailers Association (AIMRA) withdrew their planned 'No UPI Day' protest, initially scheduled for October 2. Khandelwal stated that the Finance Minister assured traders their concerns would be considered.
The implementation of the new MDR framework on October 15, 2026, will introduce new operating costs for businesses processing larger UPI transactions. Companies will need to adjust their pricing strategies or absorb these fees, potentially affecting profit margins on high-value sales.
Investors should observe transaction volume trends in the coming months, particularly for P2M payments above ₹2,000, to assess the framework's impact on merchant adoption and consumer behaviour. The next official NPCI data release for October will provide the first indication of these changes.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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