UPI payments over ₹2,000 face 0.4% MDR charged to merchants
Heads up: Starting October 15, UPI payments by specified/eligible merchants over ₹2,000 will have a 0.4% merchant discount rate (MDR) charged to merchants, not customers.
This ends the zero-fee era for big transactions, but your personal UPI transfers and merchant payments up to ₹2,000 stay free as usual.
The new fee is meant to help banks and payment apps keep things running smoothly behind the scenes.
Eligible UPI merchants under ₹1L MDR-free
Small merchants receiving up to ₹1 lakh per month through eligible UPI QR payments under the small merchant framework (especially in rural and semi-urban areas) won't have to pay this fee.
For sectors like fuel, railways, telecom, and insurance, there's a flat ₹5 charge on big transactions instead of the percentage cut.
Part of the MDR collected will support bringing more small businesses into digital payments and expanding services in places that need it most; the rest goes to banks and payment providers for keeping UPI fast and reliable.