The Unified Payments Interface (UPI) recorded a 23% year-on-year surge in transaction volumes to 24.07 billion in September 2026, while the total transaction value rose 18% to ₹29.37 lakh crore, according to data released by the National Payments Corporation of India (NPCI) on 1 October 2026. The figures reinforce UPI's position as the dominant real-time payments rail in India, processing an average of 802 million transactions daily last month.

September 2026 UPI Numbers at a Glance

On a daily average basis, UPI's transaction value stood at approximately ₹97,913 crore, reflecting the deepening penetration of digital payments across retail and merchant categories. Compared to August 2026 — when volumes rose 22% year-on-year to 24.51 billion and transaction value climbed 20% to ₹29.82 lakh crore — September's volume growth was slightly higher even as aggregate value moderated marginally, suggesting a broader base of smaller-ticket transactions.

Alongside UPI, the Immediate Payment Service (IMPS) also posted strong numbers: the total IMPS transfer value for September stood at ₹7.06 lakh crore, up 18% year-on-year, with average daily transaction counts at 11.80 million and an average daily transfer amount of ₹23,530 crore, the NPCI data showed.

Traders Call Off 'No UPI Day' After Meeting Finance Minister

The data release came against a politically charged backdrop. Leading traders' bodies had called for an October 2 observance of a 'No UPI Day' to protest a proposed 0.4% merchant discount rate (MDR) on UPI transactions above ₹2,000. The call was subsequently withdrawn after a delegation of roughly 20 trade representatives from across India met Finance Minister Nirmala Sitharaman in New Delhi.

The delegation was led by Praveen Khandelwal, Member of Parliament from Chandni Chowk and secretary general of the Confederation of All India Traders (CAIT). Traders expressed concern that the proposed MDR could raise costs for small and medium businesses and dampen merchant adoption of digital payments — a concern that carries weight given how recently India crossed the 800-million-daily-transaction milestone.

What the MDR Proposal Actually Covers

Government data and NPCI clarifications indicate that transactions of up to ₹2,000 — which constitute more than 96% of UPI merchant transaction volume — will continue to attract zero MDR and therefore no GST impact. The proposed MDR applies exclusively to person-to-merchant (P2M) transactions above ₹2,000. Furthermore, merchants whose monthly UPI receipts do not exceed ₹1 lakh are exempt from MDR liability entirely.

Critically, all person-to-person (P2P) transactions remain completely free, irrespective of the amount transferred, and are unaffected by the new framework.

Why the MDR Debate Matters for Digital India

India's UPI ecosystem has grown from a government-backed experiment into one of the world's largest real-time payments networks, processing volumes that rival those of entire national banking systems. The MDR discussion arrives at a delicate juncture: the government and NPCI must balance long-term ecosystem sustainability — ensuring payment service providers can fund infrastructure — against the risk of discouraging merchant onboarding, particularly among micro and small enterprises that have been the backbone of UPI's rural and semi-urban expansion.

This is not the first time MDR on digital payments has sparked pushback; a zero-MDR mandate introduced in 2020 was itself a policy response to earlier merchant resistance. How the government ultimately resolves the current tension is likely to shape the next phase of UPI's growth trajectory.

What to Watch Next

With the traders' protest deferred following the ministerial meeting, attention will shift to whether the government formally notifies the MDR framework, amends it, or shelves it. NPCI's October data — expected in early November — will offer the first read on whether the MDR debate has had any chilling effect on merchant transaction volumes.