Quick Take
- New UPI MDR framework starts October 15, 2026, set by NPCI.
- Recurring SIPs via UPI AutoPay pay no MDR; one-time fund buys attract 0.02%, capped at Rs 300.
- A Rs 5 lakh one-time UPI fund buy carries about Rs 100, which the fund house may absorb.
India’s new UPI fee starts October 15, 2026, and it spares recurring mutual fund SIPs while adding a small 0.02% charge on one-time fund buys.
The National Payments Corporation of India set the new rates. Large-merchant payments above Rs 2,000 will carry a 0.4% fee. Capital-market payments, which include mutual funds, sit in a separate, lower band of 0.02%.
What Is UPI’s New MDR Framework?
The new UPI MDR framework is a set of merchant fees that begins on October 15, 2026.
MDR means merchant discount rate. It is a fee for processing a digital payment, usually paid by the merchant, not the customer.
The standard rate is 0.4% on eligible payments above Rs 2,000, capped at Rs 300. Capital-market payments are carved out at 0.02%, also capped at Rs 300.
The government says about 96% of person-to-merchant payments stay outside the fee. NPCI has clarified that recurring AutoPay mandates are exempt.
Will Your Mutual Fund SIP Get Costlier?
No. A mutual fund SIP set up through UPI AutoPay does not attract the new MDR.
NPCI has said recurring mandates do not carry the charge. So a monthly SIP linked to UPI AutoPay continues as before.
In 2023, the Reserve Bank of India raised the UPI AutoPay limit for mutual fund subscriptions to Rs 1 lakh per transaction, from Rs 15,000. So a single SIP instalment on AutoPay can be as large as Rs 1 lakh with no MDR.
No new fee is added to each instalment. The same relief covers recurring utility bills and OTT subscriptions.
Jefferies expects limited impact on retail investors. For most SIP investors, nothing changes.
What Do One-Time UPI Fund Payments Now Cost?
A one-time mutual fund buy through UPI attracts a 0.02% fee, capped at Rs 300.
A Rs 5,000 buy works out to Rs 1. A Rs 10,000 buy comes to Rs 2. A Rs 1 lakh buy carries Rs 20.
The rupee cost stays small. MDR is a merchant fee, so the fund house or platform may absorb it.
Many fund houses are likely to absorb the one-time cost, so many investors may pay nothing extra.
The Rs 300 cap only bites on a buy of Rs 15 lakh or more. UPI’s Rs 5 lakh daily ceiling means most one-time buys never reach that cap.
Dhiraj Relli, managing director and chief executive of HDFC Securities, said the practical impact on clients should stay limited.
| Payment type | MDR rate | Cap per transaction |
|---|---|---|
| One-time mutual fund or stock buy | 0.02% | Rs 300 |
| Recurring SIP via UPI AutoPay | Nil | Not applicable |
| Large-merchant payment above Rs 2,000 | 0.4% | Rs 300 |
| P2P transfer, such as rent to a person | Nil | Not applicable |
What Are UPI’s Limits for Fund Investing?
UPI allows up to Rs 5 lakh per day for mutual fund investments, depending on your bank and app.
This limit restricts large lump-sum buys. A Rs 10 lakh investment cannot be sent in one UPI transfer.
For larger amounts, investors use net banking, NEFT or RTGS. Because of the Rs 5 lakh ceiling, the fee on a single UPI fund buy tops out near Rs 100.
UPI works 24 hours a day, seven days a week. That helps investors buy before the daily NAV cut-off time. NAV means net asset value, the per-unit price of a fund.
What this means for you: If you invest through a monthly SIP on UPI AutoPay, do nothing. If you make large one-time buys, expect a fee of a few rupees, or none if your fund house absorbs it.
StartupFeed Insight
The headline number sounds scary, but the math is tiny. On the Rs 5 lakh UPI daily ceiling, the most MDR a one-time fund buy can carry is about Rs 100. Most fund houses will absorb it to keep UPI flows high. The real signal is for payment platforms. Capital-market flows now sit in their own 0.02% band, far below the 0.4% merchant rate. Watch AMC and broker platforms from October 15, 2026. Expect most to eat the cost quietly rather than pass a Re 1 charge to a SIP investor.
Avinash Mishra, Business Correspondent, StartupFeed
Frequently Asked Questions
Have a tip? Write to us at editorial@startupfeed.in.
Liked this story? Follow StartupFeed on Google so our reporting reaches you first.
