UPI payments above ₹2,000 to attract fees starting October 15
What's the story
The National Payments Corporation of India (NPCI) has announced that a merchant discount rate (MDR) will be applicable on select person-to-merchant (P2M) unified payments interface (UPI) transactions from October 15. Merchants will have to pay a fee of 0.4% on transactions exceeding ₹2,000 and up to a maximum of ₹300 for payments worth ₹75,000 or more. The new framework aims at making the UPI ecosystem commercially sustainable.
Exemptions
Transactions up to ₹2,000 will remain free
The new MDR framework won't affect most daily UPI transactions.
Transactions up to ₹2,000 will continue to be free of charge, accounting for over 95% of UPI's P2M transaction volume.
Person-to-person (P2P) transfers and payments made by small merchants under the P2pm framework, those receiving up to ₹1 lakh a month through UPI QR codes, will also be exempt from MDR.
Fee structure
How much fee will be charged?
For a ₹3,000 UPI payment, the MDR would be ₹12.
A transaction worth ₹50,000 would attract a fee of ₹200.
For transactions worth ₹75,000 and above, the charge will be capped at ₹300.
This means that a payment of ₹1 lakh would incur an MDR of only up to this amount instead of the potential higher fee from a straight 0.4% calculation.
Sector-specific rates
Concessional rates for specific sectors
The new MDR framework also offers concessional rates for certain sectors.
For transactions above ₹2,000, railways, telecom, insurance, and fuel will attract a flat MDR of ₹5 instead of the standard 0.4% rate.
Capital-market transactions such as payments to mutual funds or stockbrokers/securities dealers will attract an MDR of 0.02%, capped at ₹300 under this new structure by NPCI.
Merchant responsibility
Fees can't be passed on to customers
The NPCI has clarified that the MDR will be borne by merchants and cannot be passed on to customers.
This means consumers will continue paying the displayed price when using UPI without any additional transaction or platform fee levied by UPI apps.
The new model is designed to lessen dependence on government subsidies for digital payment adoption, while providing a more stable revenue source for infrastructure and technology investments.