NPCI Sets 0.4% MDR On P2M UPI Transactions Over ₹2,000
After months of anticipation, UPI operator National Payments Corporation of India (NPCI) has introduced the merchant discount rate (MDR) fees…
The National Payments Corporation of India (NPCI) has announced the implementation of a merchant discount rate (MDR) on high-value UPI transactions, effective October 15. For Person to Merchant (P2M) transactions exceeding ₹2,000, an MDR of 0.4% will be applied, with a maximum fee of ₹300 for payments of ₹75,000 or more. However, peer-to-peer (P2P) transactions will remain free of charge.
Small merchants, including street vendors earning up to ₹1 Lakh per month via UPI QR codes in the P2PM category, will continue to enjoy zero MDR on all transactions. The Ministry of Finance stated that this framework safeguards individuals, micro-enterprises, and small businesses while imposing a limited charge on larger merchant transactions.
According to data analysis, MDR will only impact around 4% of merchant transactions, leaving 96% unaffected. Specific merchant categories, such as railways, telecom, insurance, and fuel, will have a flat fee of ₹5 for transactions above ₹2,000 to maintain low costs for essential services. Capital market transactions will have an even lower rate of 0.02%, capped at ₹300, to encourage market participation.
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