Rs 5 UPI MDR on railway bookings: What customers need to know on railway tickets

The latest market report highlights that If you are planning to book a train ticket through UPI, the new Merchant Discount Rate (MDR) framework may raise one immediate question: will your ticket become more expensive if you pay through UPI? The answer is no. Even though railway transactions above Rs 2,000 will attract a Rs 5 MDR, this charge will be paid by the merchant and cannot be passed on to the passenger.

“Merchants on-boarded cannot pass on MDR charges to customers while accepting payments through UPI. The framework ensures consumers pay only the posted price,” NPCI stated in FAQ.

The National Payments Corporation of India (NPCI), in its FAQs issued on September 15, stated a flat MDR of Rs 5 will apply to select merchant categories, including railways, telecom services, insurance and fuel, for UPI transactions above Rs 2,000. Unlike the standard MDR of 0.4 percent applicable to many other P2M transactions, these sectors will have a set charge.

So, what happens when you book a train ticket?

Suppose your train ticket costs Rs 3,000 and you choose UPI as the payment method. Under the new framework, the railway merchant would pay Rs 5 as MDR. You will still pay Rs 3,000 and not Rs 3,005.

Similarly, if the ticket costs Rs 10,000, the MDR stays Rs 5 because railway transactions covered under the special category attract a flat fee rather than the standard 0.4 percent rate. NPCI has clearly stated that merchants cannot pass the MDR charge on to customers.

What if the ticket costs less than Rs 2,000?

There is no MDR on UPI transactions of up to Rs 2,000. The new framework applies the 0.4 percent MDR to regular Person-to-Merchant (P2M) transactions above Rs 2,000, while select sectors such as railways have been given a concessional flat rate.

This means a passenger buying a Rs 1,500 train ticket through UPI will not face any MDR. Even for a Rs 3,000 or Rs 10,000 railway payment, the passenger does not have to separately pay the Rs 5 MDR. Why is NPCI introducing MDR?

NPCI stated the MDR topline will stay within the UPI ecosystem and will be used to backing infrastructure resilience, innovation, cybersecurity and customer service. The broader MDR framework will come into effect from October 15, 2026.

For regular P2M transactions above Rs 2,000, the MDR is set at 0.4 percent. It will be capped at Rs 300 for transactions of Rs 75,000 and above. That stated, railways and certain other sectors will get the special Rs 5 flat-rate treatment.