Paying for train tickets via UPI? What train passengers paying over ₹2,000 need to know before booking

UPI MDR: For passengers booking train tickets online, a small rule change from October 15 could affect payments above ₹2,000, but not in the way many may fear. UPI payments for railway ticket bookings above that threshold will attract a flat ₹5 Merchant Discount Rate, or MDR, from October 15, 2026, but the charge is to be paid on the merchant side and should not be passed on to passengers.

The change is part of a revised framework for certain person-to-merchant UPI transactions. While eligible UPI payments above ₹2,000 made to regular merchants will attract an MDR of 0.4 per cent, railway ticketing has been placed in a special category where a flat ₹5 MDR will apply instead.

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Railway ticket bookings above ₹2,000 via UPI

Under the revised framework taking effect from October 15, 2026, railway ticket payments above ₹2,000 made through UPI will attract a flat ₹5 MDR. This is different from the standard MDR for eligible merchant transactions above the ₹2,000 threshold, where the charge is calculated at 0.4 per cent.

Railway ticketing has been included in a special category along with sectors such as telecommunications, insurance and fuel. For these specified categories, the MDR on transactions above ₹2,000 will be a flat ₹5 per transaction.

Who pays the ₹5 MDR

The Ministry of Finance has clarified that the ₹5 MDR is a merchant-side charge and should not be collected separately from passengers. Merchants accepting UPI payments cannot pass the MDR on to customers, and banks have been advised to ensure that merchants do not recover the MDR from buyers.

This means that if a passenger books a railway ticket costing ₹3,000 and pays through UPI, the new rule does not mean the passenger should pay ₹3,005. In the same way, a ₹10,000 railway ticket payment through UPI will attract a flat ₹5 MDR on the merchant side rather than 0.4 per cent, which would amount to ₹40.

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How the wider UPI MDR framework works

UPI merchant payments of up to ₹2,000 will remain outside the MDR framework. The new structure applies only to eligible person-to-merchant transactions above ₹2,000. Person-to-person UPI transactions will also remain free regardless of the amount transferred.

For regular eligible merchant transactions above ₹2,000, the MDR will be 0.4 per cent. For transactions of ₹75,000 and above, the MDR will be capped at ₹300 per transaction. Railway ticketing, however, falls under the special category where a flat ₹5 MDR applies instead of the percentage-based charge.

What railway passengers need to know

For railway passengers, the key point is that the MDR for an eligible UPI payment above ₹2,000 does not rise with the value of the ticket. A ₹3,000 railway ticket and a ₹10,000 railway ticket paid through UPI would attract the same ₹5 MDR on the merchant side.

From October 15, 2026, eligible railway ticket payments above ₹2,000 made through UPI will therefore attract a flat ₹5 MDR, but passengers should not have to pay an additional ₹5 simply because the transaction exceeds ₹2,000. The ticket fare and any applicable existing booking charges will remain separate from the MDR.