New UPI MDR Charge From October 15: What Farmers Need to Know

UPI has become a common payment option for farmers buying seeds, fertilisers, pesticides, farm tools and other agricultural inputs. Many farmers now use UPI to pay local dealers and suppliers instead of carrying cash.

From October 15, 2026, some UPI merchant payments above Rs. 2,000 will come under a new Merchant Discount Rate (MDR). However, agricultural inputs will have a separate fixed MDR of Rs. 5 per eligible transaction. The new rule does not mean that farmers will have to pay a separate UPI fee. 

Will Farmers Be Charged for Using UPI?

Farmers will not be directly charged MDR when they make an eligible UPI payment. Person-to-person UPI payments will remain free. Merchant payments up to Rs. 2,000 will also remain free of MDR. The government has also said that banks should make sure merchants do not pass the MDR on to customers. This means a farmer paying a seed, fertiliser or other agricultural-input dealer through UPI should not have to pay the MDR separately.

What Is the New Charge for Agricultural Inputs?

Agricultural inputs have been placed under a separate category in the new UPI MDR framework. For eligible merchant payments above Rs. 2,000, the MDR for agricultural inputs will be a fixed Rs. 5 per transaction.

For example, if a farmer makes a Rs. 20,000 UPI payment to an eligible agricultural-input merchant, the MDR under this framework will be Rs. 5 for that transaction. It is not a separate fee charged to the farmer for using UPI.

What Does This Mean for Farmers?

For farmers, the main change will be on the merchant side. A farmer buying fertiliser, seeds or other farm inputs through UPI can continue using digital payments. There is no new direct UPI fee for the customer under the announced framework. However, farmers making large payments should keep their payment receipts and check the final amount shown before completing the transaction.

What About Small Shops and Local Dealers?

Small merchants receiving up to Rs. 1 lakh a month through UPI QR payments under the P2PM category will continue to get zero MDR. This may cover some small local shops and sellers. The exact treatment will depend on the merchant's classification under the new payment rules.

Can the New Charge Increase Farm Input Prices?

The government has advised banks to ensure that merchants do not pass the MDR on to customers. At the same time, some traders have raised concerns about the extra cost of accepting large digital payments. If merchants face higher payment costs, they may review their prices or payment terms.

For farmers, this means the impact on the final price of farm inputs will depend on how individual dealers respond to the new system.

UPI Payments Between Farmers Will Stay Free

The new MDR does not apply to normal person-to-person UPI payments. So, if a farmer sends money to another person, pays a family member or transfers money to a friend, the payment will remain free. The change mainly concerns specified merchant payments above Rs. 2,000.

What Farmers Should Know From October 15

Farmers do not need to stop using UPI because of the new MDR rules.

The important points are:

• UPI payments between individuals will remain free.
• Merchant payments up to Rs. 2,000 will remain free of MDR.
• Eligible agricultural-input payments above Rs. 2,000 will have a fixed Rs. 5 MDR.
• The MDR is a merchant-side payment-system charge.
• Banks have been advised to prevent merchants from passing the charge to customers.

For farmers, UPI will continue to be a payment option for buying farm inputs. The main change from October 15, 2026, is how some larger merchant payments are charged within the payment system.

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