UPI Payment Charges: Users making UPI transactions have several questions regarding the NPCI’s Merchant Discount Rate (MDR) framework. In particular, regarding charges on transactions exceeding ₹2,000, people want to know who will bear the cost and how it will impact customers.
In fact, under the new MDR framework, ordinary customers will not have to pay any fee for making UPI payments. Person-to-Person (P2P) transactions will also remain completely free, just as before. Small merchants have also been exempted from this charge.
What is the MDR charge for different transactions?
The MDR must be paid by certain designated merchants. No MDR charge applies to UPI transactions up to ₹2,000. However, for payments exceeding ₹2,000, a charge of 0.40% will be levied on the merchant. There is, however, a maximum cap of ₹300 on this charge.
For example:
Up to ₹2,000: No MDR charge
₹3,000: ₹12 (at 0.40%)
₹4,000: ₹16 (at 0.40%)
₹5,000: ₹20 (at 0.40%)
₹50,000: ₹200 (at 0.40%)
₹75,000 or more: Maximum ₹300
This means that if a customer makes a UPI payment of ₹1 lakh, the merchant will not have to pay more than ₹300 in MDR due to the prescribed maximum limit.
Will customers have to pay any charges for UPI payments?
No. Ordinary consumers will not be charged any fee for making payments via UPI. Customers will be able to use UPI without any additional charges, just as before.
Will there be a charge for sending money to friends and family?
No. P2P transactions—that is, UPI transactions made from one person to another—will remain free. Customers will not be charged any fee for sending money via UPI to friends, family members, or other individuals. Similarly, no charges will apply when transferring funds to one’s own other bank account using UPI.
Exemption from MDR for Small Merchants
Small merchants falling under the P2PM framework will continue to be exempt from MDR. This includes vendors who receive payments of up to ₹1 lakh per month via UPI QR codes; such small businesses will not be subject to the MDR charge.
Thus, the MDR provision primarily applies to designated merchant transactions.
