What it costs
How much will UPI MDR cost my business? Worked scenarios for a kirana, a restaurant and a pharmacy
What UPI MDR adds to a month's costs, worked through for a kirana, a restaurant and a pharmacy - counting payments above ₹2,000, not averaging.
Updated: 6 min readहिन्दी
By upicharges.in editorial desk · Published:
The short answer
How much will UPI MDR add to my monthly costs?
Your cost depends on how many payments are above ₹2,000 and how large they are, not on your total turnover (FAQ Q26).
Fifty payments of ₹3,000 a month cost ₹600; the smaller payments cost nothing.
"0.4% of my UPI turnover" is the number most shopkeepers reach for first, and it is almost always wrong - usually by a lot. UPI MDR is charged only on payments above ₹2,000 FAQ question FAQ Q26, and payments up to ₹2,000 make up more than 95% of UPI merchant payments by volume FAQ question FAQ Q2. So for most shops, most of the money coming in costs nothing at all.
This article works through a month for three kinds of shop - a kirana, a restaurant and a pharmacy - the way the rules actually apply, then shows how to do the same for your own business with the monthly cost estimator. Every rule carries its FAQ question number so you can check it in the official document.
Step zero: are you charged at all?
Before any arithmetic, check your category. If your UPI money arrives over QR straight into a personal account and you collect up to ₹1 lakh a month over UPI, you are P2PM and your MDR is zero on every payment FAQ question FAQ Q23, Q24. One busy month above ₹1 lakh does not change that; only three months in a row does FAQ question FAQ Q29. The check takes a minute: Does the new UPI MDR apply to my shop? A step-by-step check.
Everything below assumes a regular (P2M) shop in the standard category: 0.4% of the full amount on payments above ₹2,000, capped at ₹300 a payment FAQ question FAQ Q26, Q32.
Why averages mislead
Two shops can have the same turnover and very different MDR bills. The fee depends on which payments cross ₹2,000, and by how much.
The honest way to estimate is to count the payments above ₹2,000 and price those. That is what the three scenarios below do.
A kirana store
A neighbourhood kirana with a current account takes about ₹4,50,000 a month over UPI. Almost all of it is daily shopping - milk, bread, rice, oil - in bills well under ₹2,000. But about 50 times a month, a family does a monthly stock-up or a small restaurant buys in bulk, at around ₹3,000 each.
If the same kirana's QR paid into the owner's savings account and it took under ₹1 lakh a month, the answer would be zero FAQ question FAQ Q23, Q24.
A restaurant
A family restaurant takes 1,000 UPI payments a month. Most are meals for one to four people. About 120 are larger - birthday dinners, office lunches, catering orders - averaging ₹3,500.
Catering is where the cap starts to matter. A single ₹90,000 wedding order costs ₹300, not ₹360, because MDR stops at ₹300 a payment FAQ question FAQ Q32. More on that in How the ₹300 UPI MDR cap works, with examples at ₹5,000, ₹50,000 and ₹1 lakh.
A pharmacy
A pharmacy's bills are more spread out: many small ones, a steady run of mid-sized ones, and some large ones for long-term prescriptions.
| Payment | MDR | You receive |
|---|---|---|
| ₹800 | ₹0 | ₹800 |
| ₹1,900 | ₹0 | ₹1,900 |
| ₹2,500 | ₹10 | ₹2,490 |
| ₹4,500 | ₹18 | ₹4,482 |
| ₹12,000 | ₹48 | ₹11,952 |
Over a year
Multiply the month by twelve, and remember what that number is: a cost of taking payments instantly, with no cash to count, store or bank. It does not go on the customer's bill - merchants cannot pass MDR on FAQ question FAQ Q34. See Can a shopkeeper charge the 0.4% to customers? What the rules actually say.
If you want to compare it with what the same payments would cost on cards, see UPI vs debit card vs credit card: what a merchant actually pays now.
Doing it for your own shop
The monthly cost estimator asks for three things: your monthly UPI turnover, how many UPI payments you took, and - optionally, but it matters most - how many of them were above ₹2,000.
If you know that last number, fill it in. Your UPI app's payment history, sorted by amount, usually makes it easy to count. The estimator then shows the monthly fee, the annual fee and the fee as a share of turnover, with every step of the working written out.
If you leave it blank, the estimator assumes 96% of your payments are ₹2,000 or less, and says so plainly next to the result. That assumption comes from widely reported figures, not your shop; the FAQ itself says more than 95% of UPI merchant payments by volume are up to ₹2,000 FAQ question FAQ Q2.
It also shows a range, because it has to. Knowing how many payments were above ₹2,000 still does not tell anyone how your money splits between the small payments and the large ones. So the estimator values the small payments at the middle of what your figures allow, and shows the fee at both ends.
Checking the real number after 15 October
An estimate is only a plan. From 15 October 2026 FAQ question FAQ Q5, your settlement report will show what was actually deducted on each payment. Put it through the settlement check at the end of the month: it recalculates every payment and tells you whether you were overcharged, and by how much. How to read the report yourself: How to read your UPI settlement statement and spot a wrong deduction.
If you are in a flat ₹5 sector - railways, telecom, insurance, fuel, or electricity, water and piped-gas bills - the arithmetic is simpler still: ₹5 on each payment above ₹2,000 FAQ question FAQ Q33, Q41. See Flat ₹5 sectors: fuel, telecom, insurance, railways, utilities - and what is still unconfirmed.
The whole picture of the new rules is in UPI charges from 15 October 2026: the complete guide for merchants.
Common questions
Is UPI MDR 0.4% of my total UPI turnover?
No. It is 0.4% of each payment above ₹2,000; payments of ₹2,000 or less cost nothing (FAQ Q26).
How much MDR on 50 payments of ₹3,000 a month?
₹600 - each ₹3,000 payment costs ₹12 (FAQ Q35).
Does a big catering order cost more than ₹300 in MDR?
No. MDR on a single payment is capped at ₹300, which applies from ₹75,000 (FAQ Q32).
Why does the estimator show a range?
Because the number of payments above ₹2,000 does not tell us how much each of them was. The range shows the fee at both ends of what your figures allow; the middle is the estimate.
Everything in one place: the complete guide to UPI charges →
upicharges.in editorial desk — Checks every article against the NPCI/DFS FAQ of 15 September 2026
Every fact in this article comes from the NPCI/DFS FAQ of 15 September 2026. Read the official NPCI/DFS FAQ