# Government of India Sets UPI MDR Framework

The Government of India has implemented a new Unified Payments Interface (UPI) framework introducing a 0.4% Merchant Discount Rate (MDR) on person-to-merchant transactions exceeding Rs 2,000, ending the previous zero-MDR policy for these transactions. Crucially, 5% of the total MDR collections will be allocated to a dedicated fund aimed at supporting digital payment adoption among small merchants, fostering financial inclusion and sustainability within the digital payments ecosystem.

- This policy shift signals increased opportunities for technology providers and payment service vendors to engage with government-backed initiatives promoting digital payment infrastructure for small merchants.
- Procurement professionals should anticipate funding and contract opportunities related to digital payment solutions, merchant onboarding, and financial inclusion programs supported by the MDR fund.
- Companies specializing in payment processing, merchant services, and fintech innovation may benefit from aligning offerings with the Government of India's financial inclusion objectives.
- The involvement of the National Payments Corporation of India (NPCI) indicates potential collaboration or procurement activities centered on UPI platform enhancements and merchant support services.

**Jurisdictions:** federal
**Industries:** Information Technology
**Topics:** Digital Infrastructure
**Published:** September 15, 2026

### Government Entities
- Government of India
- National Payments Corporation of India (NPCI)

### Sources
- [UPI MDR: Govt to set aside 5% of collections for small merchant fund](https://www.moneycontrol.com/news/business/upi-mdr-govt-to-set-aside-5-of-collections-for-small-merchant-fund-14030500.html) - Moneycontrol.com