A new UPI payment rule is about to change how merchants handle certain transactions on Indian Railways. For railway ticket bookings above INR 2,000, a flat INR 5 Merchant Discount Rate (MDR) will be applied. This major update in the digital payments space in India will be implemented starting October 15, 2026.
IRCTC UPI Payment Structure To Change
Starting October 15, 2026, UPI payments concerning Indian Railways are about to be affected. The railway ticket bookings above INR 2,000 will attract a flat INR 5 MDR. These IRCTC new UPI rules will bring key structural changes to payment processing across various commercial services.
Passengers booking tickets through IRCTC will not face any additional expenses. Under government guidelines, MDR is strictly collected only from service providers and merchants. This means that an INR 4,500 ticket will deduct exactly INR 4,500 from your bank account.
Under regular retail transactions that incur a 0.4% fee on payments above INR 2,000, Indian Railways falls into an essential utility category. The UPI framework will introduce a 0.4 per cent fee on UPI payments above INR 2,000 made to regular merchants.
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IRCTC New UPI Rules: Railway Train Ticket UPI Payment Charges
For railway ticket payments above INR 2,000, the applicable charge will be flat INR 5 per transaction, instead of the 0.4 per cent of the ticket value. The charge will apply on the merchant side not on the passenger side. The railway ticketing has been included in a special category along with sectors like telecom, insurance, fuel, and utility payments. Under the new structure:
Up to Rs 2,000: No MDR
Above Rs 2,000 for regular merchants: 0.4 per cent MDR
Above Rs 2,000 for railway ticketing: Flat INR 5 MDR
Passenger: The MDR should not be charged separately
For example, a Rs 10,000 payment to a regular merchant would attract INR 40 at 0.4 per cent. But an INR 10,000 railway ticket payment through UPI would attract only the flat INR 5 MDR on the merchant side.
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Will Indian Railways Increase Ticket Prices?
The new MDR does not mean that Indian Railways will increase fares. The IRCTC UPI payment scheme has been reworked in the way that the MDR will be on the merchant side than recovered from the passenger.
So a passenger purchasing a INR 3,000 ticket through UPI will only pay the INR 3,000 fee and not INR 3,005. The additional INR 5 cost is to be borne by the merchant. UPI transactions of up to INR 2,000 will remain outside the new MDR levy, while person-to-person UPI transfer will also remain free irrespective of the amount.
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Summing Up
The INR 5 charge may appear small for an individual passenger or the merchant, but the overall cost could become significant because of the large number of railway tickets booked almost every minute. The railway officials have stated that the MDR will be levied on the merchant side and not on the passenger side.
