Customers will not pay the new charge on eligible UPI payments
UPI merchant charges
The UPI Merchant Discount Rate will come into effect from October 15.
The fee will be charged on certain merchant transactions above ₹2,000.
The merchants will bear the 0.4% MDR on the eligible transactions.
This MDR fee will not be borne by the customers directly.
It has been stated by the government.
UPI person to person transactions will continue to be totally free.
Paying to merchants for transactions below ₹2,000 will also be free.
Small eligible merchants will get extra MDR protection.
It is stated that about 96% P2M transactions are not affected.
There will be a cap of ₹300 on each transaction.
The cap will be applicable for transactions of ₹75,000 or more.
Certain essential sectors will follow different flat fee regulations.
These include railway, telecom, insurance, and fuel.
These will be charged with an additional ₹5 MDR over ₹2,000.
Payments done through capital markets will be under another MDR regime.
The government has directed banks not to impose MDR on customers.
It means that customers will not need to pay any additional charges for eligible UPI transactions.
The clarification has been issued to clear the confusion regarding the new system.
The new system will come into effect from October 15, 2026.
