New UPI MDR From October 15, 2026: Important Details for Farmers

Farmers across India are increasingly using Unified Payments Interface (UPI) to purchase seeds, fertilisers, pesticides, farm tools and other agricultural supplies. Digital payments have made it easier to pay local dealers and suppliers without carrying cash.

From October 15, 2026, certain UPI merchant transactions above Rs. 2,000 will attract a Merchant Discount Rate (MDR). However, agricultural inputs will fall under a separate category, with a fixed MDR of Rs. 5 per eligible transaction.

This does not mean farmers will have to pay an additional fee for using UPI. The charge applies on the merchant side of the payment system.

Will Farmers Have to Pay Extra for UPI Transactions?

Farmers making eligible UPI payments will not be directly charged the MDR. Regular person-to-person UPI transfers will continue to be free, while merchant payments of up to Rs. 2,000 will remain free of MDR.

The government has also advised banks to ensure that merchants do not transfer this charge to customers.

Therefore, farmers purchasing seeds, fertilisers or other agricultural inputs through UPI should not have to pay the MDR separately.

What Is the MDR for Agricultural Inputs?

Under the new UPI MDR framework, agricultural inputs have been placed in a separate category.

Eligible merchant transactions above Rs. 2,000 for agricultural inputs will attract a fixed MDR of Rs. 5 per transaction.

For instance, if a farmer pays Rs. 20,000 through UPI to an eligible agricultural-input merchant, the applicable MDR under this framework will be Rs. 5. This amount is a merchant-side charge and not an additional UPI fee payable by the farmer.

How Will the New UPI Rules Affect Farmers?

The main change will concern merchants accepting eligible digital payments. Farmers can continue using UPI to purchase seeds, fertilisers, pesticides and other farm supplies.

The announced framework does not introduce a new direct UPI fee for customers. However, farmers making larger payments should check the amount displayed before completing a transaction and keep their payment receipts for reference.

What About Small Shops and Local Agricultural Dealers?

Small merchants receiving up to Rs. 1 lakh per month through UPI QR payments under the Person-to-Person Merchant (P2PM) category will continue to receive zero MDR.

This provision may apply to some small local shops and sellers. However, the applicable treatment will depend on how each merchant is classified under the new payment rules.

Could the New MDR Affect Farm Input Prices?

The government has advised banks to make sure merchants do not pass the MDR on to customers.

However, some traders have expressed concerns about the additional cost of accepting large digital payments. Merchants facing higher payment-related expenses may review their prices or payment terms.

For farmers, the effect on the final cost of agricultural inputs will depend on how individual dealers respond to the new payment framework.

UPI Transfers Between Individuals Will Remain Free

The new MDR framework does not cover regular person-to-person UPI payments.

Farmers can continue sending money to friends, family members or other individuals without paying this MDR. The change mainly relates to specified merchant transactions above Rs. 2,000.

What Farmers Should Know About the New UPI MDR Rules

Farmers do not need to stop using UPI because of the announced MDR changes.

Here are the key points to remember:

• Person-to-person UPI transfers: Will remain free.
• Merchant payments up to Rs. 2,000: Will continue to have zero MDR.
• Eligible agricultural-input payments above Rs. 2,000: Will attract a fixed MDR of Rs. 5 per transaction.
• Who pays the MDR: The charge applies on the merchant side, not as a separate UPI fee for farmers.
• Protection for customers: Banks have been advised to ensure merchants do not pass the MDR on to customers.

For farmers, UPI will remain an option for purchasing agricultural inputs and making digital payments. From October 15, 2026, the key change will be how certain larger merchant transactions are charged within the payment system.

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