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UPI MDR 2026: What Hardware & Industrial Retailers Need to Know

Last updated: August 21, 2026

Pioneer Mill Stores works with hardware and industrial retailers across UP — here's what the new UPI rules mean for your shop.

What Actually Changed

On August 6, 2026, Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026. This bill amends Section 10A of the Payment and Settlement Systems (PSS) Act, 2007, removing the legal bar that previously prevented charging a Merchant Discount Rate (MDR) on UPI transactions.

In plain terms, previously, UPI was free for merchants because the law prohibited charging a fee. Now that the legal bar has been lifted, payment processors are allowed to charge a fee. However, the actual rate has not yet been notified.

Who Pays — Merchants or Customers?

The MDR is charged to the merchant (the business receiving the payment), not the customer. If your hardware store accepts a payment, your payment service provider (PSP) will deduct the fee from the final settlement amount before it hits your bank account.

Importantly, P2P (person-to-person) UPI transactions stay free. If you are sending money to a friend or family member, there are no charges. The changes only apply to business transactions.

The ₹2,000 Threshold and Who's Exempt

It is expected that the MDR will only apply to business transactions above ₹2,000. Small merchants and local kirana stores are expected to remain exempt from these charges.

This exemption protects small neighborhood stores from bearing additional costs while ensuring that larger transactions in hardware and industrial retail are covered.

What's Still Undecided

While the law has passed, several key details are still pending:

  • The exact MDR rate: It is expected to land between 0.25% and 0.40%, but the final rate will be decided by NPCI's UPI & Services Steering Committee under RBI oversight.
  • The timeline: We do not yet know the exact date these charges will kick in.
  • Merchant categories: The specific merchant categories that will be affected or exempted have yet to be officially notified.

Note: All numbers and rates regarding UPI MDR are provisional. We'll update this post when the final rate is announced.

What Should You Do Right Now?

As a retailer, you shouldn't panic, but you should prepare. Here are a few practical steps you can take today:

  • Review your current pricing: Identify which of your items typically sell for more than ₹2,000.
  • Understand MRP vs non-MRP: Figure out which items are fixed by MRP and which are non-MRP (you can only adjust prices on non-MRP items to cover the new costs).
  • Talk to your payment provider: Ask your payment service provider (PSP) about their planned rates and how they intend to roll them out.
  • Use our calculator: Use our free UPI MDR Calculator to see exactly how these potential fees might affect your margins.

For a step-by-step guide on repricing non-MRP stock, read How to Reprice Non-MRP Stock After UPI MDR.

Ready to update your inventory or need reliable hardware supplies? At Pioneer Mill Stores, we've been supporting retailers across UP with top-quality industrial products. Check out our about us page to learn more, or contact us to discuss your wholesale needs.

Stay informed and keep your business growing with IndentBuy by Pioneer Mill Stores.