UPI Charge From October 15: Farmers Buying Seeds, Fertiliser Need to Know This

Key Highlights

• UPI payments between individuals will remain free.

• Merchant payments up to ₹2,000 will have zero MDR.

• Eligible farm-input payments above ₹2,000 will attract ₹5 MDR.

• MDR will be charged to merchants, not farmers.

• Banks must prevent merchants from passing MDR to customers.

UPI has become an important payment method 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, a new Merchant Discount Rate (MDR) framework will apply to certain UPI merchant payments above ₹2,000. However, agricultural inputs will have a fixed MDR of ₹5 per eligible transaction, instead of the standard 0.4% MDR. Importantly, this is a merchant-side charge, so farmers will not have to pay a separate UPI fee.

Will Farmers Have to Pay the New UPI Charge?

No. Farmers making eligible UPI payments will not be directly charged MDR. Person-to-person UPI transactions will remain completely free, regardless of the amount transferred. Merchant payments up to ₹2,000 will also remain free of MDR.

The government has also clarified that banks and payment providers should ensure the MDR is not passed on to customers. Therefore, a farmer paying a seed, fertiliser or agricultural-input dealer through UPI should not have to pay the MDR separately.

What Is the New MDR for Agricultural Inputs?

Agricultural inputs have been placed in a special category under the new UPI framework. For eligible merchant payments above ₹2,000, the MDR will be a fixed ₹5 per transaction rather than the standard 0.4% rate.

For example, if a farmer makes a ₹20,000 UPI payment to an eligible agricultural-input merchant, the applicable MDR will be ₹5. This ₹5 is a charge within the merchant payment system and is not a separate fee that the farmer has to pay for using UPI.

What Does the New Rule Mean for Farmers?

For farmers, the main change is on the merchant side. They can continue using UPI to purchase seeds, fertilisers, pesticides and other eligible farm inputs.

Farmers making large payments should still check the final amount displayed before completing a transaction and keep the payment receipt for their records. The government has specifically stated that customers should not be charged the MDR separately.

What About Small Shops and Local Dealers?

Small merchants covered under the P2PM category will continue to receive zero MDR if they receive up to ₹1 lakh per month through UPI QR payments. This provision is intended to protect small businesses, including neighbourhood shops and street vendors.

Therefore, the exact impact on a local agricultural dealer will depend on how that merchant is classified under the new payment framework.

Could Farm Input Prices Increase?

The government has advised banks to ensure that merchants do not pass the MDR cost on to customers. However, the new charge could still become a consideration for dealers handling larger digital payments.

Some traders have already raised concerns that additional payment costs could put pressure on their margins.

For farmers, this means the effect on the final price of seeds, fertilisers or other inputs will depend on how individual dealers respond to the new system. The MDR itself, however, is not supposed to be separately collected from the customer.

UPI Transfers Between Farmers Will Remain Free

Farmers do not need to worry about the new MDR when sending money to another individual. Person-to-person UPI payments will remain completely free, even for amounts above ₹2,000.

The new framework mainly covers specified person-to-merchant (P2M) transactions above ₹2,000. Around 96% of P2M transactions are expected to remain unaffected because of the ₹2,000 threshold and other zero-MDR provisions.

What Farmers Should Know From October 15

• UPI transfers between individuals will remain free.

• Merchant payments up to ₹2,000 will remain MDR-free.

• Eligible agricultural-input payments above ₹2,000 will attract a fixed ₹5 MDR.

• MDR is a merchant-side payment-system charge, not a separate farmer fee.

• Banks have been advised to prevent merchants from passing MDR to customers.

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CMV360 Says

The new UPI MDR framework from October 15, 2026, will change how some larger merchant payments are processed, but farmers can continue using UPI for their everyday needs. Agricultural-input transactions above ₹2,000 will carry a fixed ₹5 MDR on the merchant side. Farmers should check receipts and final payment amounts, while dealers will need to manage the new payment cost without separately charging customers.