Train passengers using UPI for bookings above ₹2,000 will encounter a new Merchant Discount Rate (MDR) rule effective October 15, 2026. While a flat ₹5 MDR will apply to these transactions, the Ministry of Finance has explicitly stated that this charge is to be borne by the merchants and must not be passed on to the customers.
Understanding the New UPI MDR Rule
Under the revised framework for specific person-to-merchant UPI transactions, railway ticketing has been placed in a special category. This means that for ticket bookings exceeding ₹2,000 paid via UPI, a flat ₹5 MDR will be levied. This differs from the standard MDR for other eligible merchant transactions above ₹2,000, which typically attracts a 0.4 percent charge.
For instance, if a passenger books a railway ticket costing ₹3,000 or even ₹10,000 and pays through UPI, the merchant (Indian Railways or its booking agents) will incur a flat ₹5 MDR, not a percentage-based charge that would be higher for more expensive tickets.
Special Categories and Merchant Responsibility
Railway ticketing joins other crucial sectors like telecommunications, insurance, and fuel, which also fall under this special MDR treatment. For these specified categories, any UPI transaction above ₹2,000 will consistently attract a flat ₹5 MDR.
Crucially, the Ministry of Finance has clarified that this ₹5 MDR is a merchant-side charge. Banks have been advised to ensure that merchants do not recover this MDR from buyers. Therefore, passengers should not expect to pay an additional ₹5 on top of their ticket fare simply because their UPI payment exceeds the ₹2,000 threshold.
What This Means for Passengers
For railway passengers, the key takeaway is that the new MDR for eligible UPI payments above ₹2,000 does not translate into an increased cost for them. The price of the ticket and any existing booking charges will remain separate from the MDR. The government's directive aims to ensure that while the digital payment ecosystem continues to be supported, the financial burden of these transaction charges does not fall on the end consumer.