New UPI Charges From October 15: What Changes for Customers
UPI merchant payments above Rs 2,000 will attract MDR from October 15, but the charge will be paid by merchants and cannot be directly passed on to customers.
A new Merchant Discount Rate (MDR) framework for UPI merchant payments will take effect from October 15, introducing charges on certain transactions above Rs 2,000. However, customers will not be directly charged the fee.
Under the framework, merchants will pay 0.4% MDR on eligible direct account-to-merchant UPI payments above Rs 2,000. The charge will be capped at Rs 300 for transactions of Rs 75,000 or more. For example, a Rs 3,000 payment would attract Rs 12 in MDR, while a Rs 50,000 payment would attract Rs 200. A Rs 1 lakh transaction would be capped at Rs 300.
The MDR cannot be passed on to customers as a separate UPI fee. Person-to-person transfers will also remain free, regardless of the amount.
Most everyday UPI payments will not be affected. Transactions of Rs 2,000 or less account for more than 95% of P2M transaction volume and will continue without MDR.
Certain sectors, including railways, fuel, telecom and insurance, will have a flat Rs 5 MDR for eligible payments above Rs 2,000. Capital-market transactions will attract 0.02%, subject to a Rs 300 cap.
Small merchants receiving up to Rs 1 lakh a month through eligible UPI QR payments will continue to qualify for zero MDR.
While consumers will not see a separate UPI charge, businesses will decide how to absorb the additional processing cost. The government says the framework is intended to create a sustainable funding model for UPI infrastructure, cybersecurity and innovation.
