Govt Introduces 0.4% MDR On Large UPI Merchant Payments, Caps Fee At ₹300
New Delhi, Sep 15: The government on Tuesday set a 0.4 per cent charge on UPI payments above Rs 2,000 to merchants and capped the fee at Rs 300 for payments of Rs 75,000 and above as it rolled out a framework for large digital merchant payments. New UPI fee framework announced The move ends the zero-MDR regime that has been in place since January 2020, introduced to drive digital payments…
New Delhi, September 15 - The government has introduced a 0.4% Merchant Discount Rate (MDR) on large UPI merchant payments in India, with a cap of Rs 300 for payments over Rs 75,000. This framework for large digital merchant payments replaces the zero-MDR regime, which has been in place since January 2020. The move aims to sustain digital payment adoption, despite criticism from banks and fintechs.
Essential sectors like railways, telecom, and fuel will incur a flat Rs 5 fee per transaction, while capital markets face a lighter 0.02% rate. Small merchants earning up to Rs 1 lakh per month through UPI QR codes remain completely exempt from any new charges, which the government claims will shield 96% of merchant transactions from the fee.
The National Payments Corporation of India (NPCI) committee will soon decide on UPI MDR charges, and large merchant transactions may face the new fees. Merchant Discount Rate (MDR) on person-to-merchant (P2M) UPI transactions above Rs 2,000 has been capped at Rs 300 for payments over Rs 75,000. Person-to-person transfers, which account for 37% of UPI's volume and 70% of its value, remain unaffected.
App providers are prohibited from adding platform fees, and banks have been instructed not to pass MDR costs to customers. A fifth of the new fee pool will be allocated to fund small-merchant UPI expansion.
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