The UPI MDR Calculation Formula
MDR is calculated differently depending on the transaction amount and merchant category. Here is the full logic:
Step 1: Check transaction type
If P2P or zero-MDR category → MDR = ₹0, stop.
Step 2: Check threshold
If amount ≤ ₹2,000 → MDR = ₹0, stop.
Step 3: Apply category rate
If standard merchant: MDR = min(amount × 0.004, ₹300)
If essential sector: MDR = ₹5 (flat)
If capital market: MDR = min(amount × 0.0002, ₹300)
Step 4: Calculate GST (if applicable)
GST = MDR × 0.18
Step 5: Calculate settlement
Settlement = Amount − MDR − GST
If P2P or zero-MDR category → MDR = ₹0, stop.
Step 2: Check threshold
If amount ≤ ₹2,000 → MDR = ₹0, stop.
Step 3: Apply category rate
If standard merchant: MDR = min(amount × 0.004, ₹300)
If essential sector: MDR = ₹5 (flat)
If capital market: MDR = min(amount × 0.0002, ₹300)
Step 4: Calculate GST (if applicable)
GST = MDR × 0.18
Step 5: Calculate settlement
Settlement = Amount − MDR − GST
Worked Examples
Example 1: ₹5,000 Standard Merchant
MDR = ₹5,000 × 0.4% = ₹20. GST = ₹20 × 18% = ₹3.60. Total = ₹23.60. Settlement = ₹4,976.40.
Example 2: ₹10,000 Standard Merchant
MDR = ₹10,000 × 0.4% = ₹40. GST = ₹40 × 18% = ₹7.20. Total = ₹47.20. Settlement = ₹9,952.80.
Example 3: ₹75,000 Standard Merchant (Cap)
MDR = ₹75,000 × 0.4% = ₹300 (exactly at cap). GST = ₹300 × 18% = ₹54. Total = ₹354. Settlement = ₹74,646.
Example 4: ₹10,000 Essential Sector
MDR = ₹5 flat. GST = ₹5 × 18% = ₹0.90. Total = ₹5.90. Settlement = ₹9,994.10.
Using the Calculator
Rather than calculating manually, use the UPI MDR calculator to get instant results for any amount, category, and GST option.
Information based on official sources verified as of 18 September 2026. Rules are subject to change. Always verify with NPCI, your bank or a financial advisor. View sources →