Indian cryptocurrency exchanges that take rupee deposits through in-app UPI are expected to fall under the standard person-to-merchant (P2M) Merchant Discount Rate (MDR) of 0.4% on transfers above Rs 2,000 from October 15, 2026.
Neither the National Payments Corporation of India (NPCI) nor the finance ministry has issued a crypto-specific circular. The levy applies to specified P2M UPI receipts above that threshold; FIU-registered Virtual Digital Asset Service Providers (VDASPs) are not named as a separate category.
Users depositing Indian rupees through the UPI option inside apps such as CoinDCX, CoinSwitch, Mudrex and ZebPay are expected to continue to see the full amount credited, since the finance ministry has barred merchants and UPI applications from passing the charge to consumers.
The rule change reshapes the cost economics of the country’s most-used crypto on-ramp, moving a segment that has run a zero-fee rupee deposit rail as a core acquisition tool into a paid merchant tier for the first time since Merchant Discount Rate (MDR) was waived on UPI in January 2020.
How the fee lands on the crypto rail
The charge applies to Person-to-Merchant (P2M) UPI transactions above Rs 2,000, at 0.4% of the transaction value, capped at Rs 300 for transactions of Rs 75,000 and above, effective October 15, 2026, as set out in the Ministry of Finance / Press Information Bureau (PIB) statement posted on 15 September 2026 at 6:45 PM (Release ID: 2310586) and NPCI’s operational framework dated 15 September 2026.
Deposits of Rs 2,000 or less remain outside the framework. When a user sends Indian rupees from a UPI app directly into an exchange wallet, the transfer falls under the P2M category, with the exchange treated as the receiving merchant.
At the standard rate, a Rs 10,000 deposit into a domestic exchange will now cost the platform Rs 40. A Rs 3,000 payment carries an MDR of Rs 12 at the 0.4% rate, and a Rs 50,000 transaction attracts Rs 200. Payments of Rs 75,000 and above hit the Rs 300 ceiling. NPCI has stated that transactions up to Rs 2,000 account for over 95% of P2M UPI volume, leaving the bulk of everyday small-ticket flows outside the framework.
P2P transfers stay free of the levy
Person-to-Person (P2P) UPI transfers remain free of any MDR at any transaction value. The finance ministry has confirmed that no transaction fee, platform fee, or other charge may be imposed on individuals for sending or receiving money through UPI, and that UPI transactions accounting for 70% of the total transaction value will remain completely outside the MDR framework.
Peer-to-peer trades on platforms such as WazirX or Binance P2P, where a buyer pays a seller directly through UPI, fall under P2P and will not attract the new merchant rate on the payment rail itself. The seller’s quoted price may still carry a margin, but the underlying UPI transfer stays fee-free.
Small merchants receiving up to Rs 1 lakh a month through UPI QR codes under the Person-to-Person-Merchant (P2PM) category are also exempt. Domestic crypto exchanges, given their monthly rupee deposit volumes, do not fall inside the small-merchant carve-out.
Users continue to pay nothing extra
The PIB statement posted on 15 September 2026 at 6:45 PM (Release ID: 2310586) stated that MDR is a charge within the merchant payment ecosystem, not a charge on customers; banks have been advised to ensure merchants do not pass it on, and UPI apps may not impose platform or hidden fees.
The finance ministry issued a matching clarification on the same day, stating that approximately 96% of all P2M transactions will remain unaffected and that MDR will apply only to specified merchant transactions above Rs 2,000.
FIU-registered domestic exchanges currently list zero fees on UPI-based rupee deposits. CoinDCX’s public schedule shows no rupee deposit fee across UPI, Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS). Mudrex, ZebPay and CoinSwitch also carry zero deposit fees on UPI at present. No FIU-registered exchange had issued a public update to its deposit fee structure by Wednesday morning in response to the NPCI circular.
The silent cost sitting inside the crypto rail
The 0.4% charge lands on a segment that has spent most of 2026 competing on lower and lower headline fees. Following WazirX’s ZERO subscription launch and the wider zero-fee battle earlier this year, domestic exchanges have positioned free rupee on-ramps and thin spot fees as their primary retail hook. Absorbing the MDR without adjusting spreads or introducing a disclosed processing fee places direct pressure on the payment cost line of each platform.
For an exchange processing Rs 100 crore in monthly UPI deposits above the Rs 2,000 threshold, the running arithmetic sits at up to Rs 40 lakh in MDR outflow every month, before the Rs 300 cap moderates the cost of higher-ticket transactions. The final figure depends entirely on the ticket-size distribution across the user base.
The cost stacks on top of an already dense compliance load. Indian crypto trading operates under a 30% flat tax on gains from Virtual Digital Assets (VDAs) under Section 115BBH of the Income Tax Act 1961 and a 1% Tax Deducted at Source (TDS) under Section 194S on qualifying spot transfers, a regime that has pushed a significant share of activity offshore since its introduction.
Related development on the ground
The MDR shift arrives days after India’s Central Bureau of Investigation (CBI) issued a public advisory on September 11 warning Indian crypto users against informal P2P trades arranged on Telegram and WhatsApp that use UPI, citing the risk of receiving funds linked to fraud. The agency asked users to conduct all activity on FIU-registered exchanges and reject third-party payments.
The two developments together reinforce the regulated on-ramp as the preferred route for Indian crypto users, even as the cost of operating that on-ramp shifts onto the exchange balance sheet. As of mid-2026, 54 Virtual Digital Asset Service Providers (VDASPs) are registered with FIU-IND under the Prevention of Money Laundering Act (PMLA), a mix of domestic exchanges and select offshore platforms including CoinDCX, CoinSwitch, WazirX, ZebPay, Mudrex, Binance, Coinbase, KuCoin and Bybit.
Governance rails and edge cases
The Centre has amended the Payment and Settlement Systems Act, 2007, providing the legal framework to notify electronic payment modes on which charges can be waived, and on September 14 notified that UPI transactions up to Rs 2,000 will attract zero MDR. NPCI’s steering committee finalised the operational parameters, fee distribution and category-wise caps in a circular dated September 15.
Concessional slabs apply to specific verticals under the same framework. Railways, telecom, insurance and fuel merchants face a flat Rs 5 MDR on payments above Rs 2,000 instead of the 0.4% headline rate, and payments related to mutual funds, securities, stockbrokers and dealers attract 0.2%. Crypto exchanges are not listed among the concessional categories in the current circular. AutoPay mandates and recurring payments stay outside the MDR framework, per the NPCI FAQ.
What should Indian crypto users check after October 15
Users should verify the deposit confirmation screen on their exchange app after the October 15 start date. The summary should continue to show the full deposit amount credited if the platform holds its zero-fee policy.
Deposits should be routed only through the UPI option inside the exchange app, sent from the bank account linked during Know Your Customer (KYC) verification. Sending rupees to an unlisted Virtual Payment Address (VPA) outside the exchange app remains a high-risk practice, particularly given the CBI’s September 11 advisory on third-party payments.
The open question
Whether Indian exchanges will absorb the 0.4% cost indefinitely, adjust trading spreads, or introduce a disclosed processing fee is the primary variable to watch after October 15. Under the rules as written, the levy sits with the platform, not the consumer. Any change to that stance on the exchange side would need to be structured outside the UPI payment rail itself, since the finance ministry has explicitly closed the door on customer-facing UPI charges.
The broader cost stack that Indian users already carry on every rupee-denominated crypto trade, from the 30% VDA tax to the 1% TDS to onshore-offshore spread differentials, now has one more line item sitting quietly beneath it.
For the moment, that line item stays entirely on the exchange side of the ledger. The October 15 implementation date gives payment aggregators and platforms one month to update billing systems.
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