All you need to know about MDR on UPI payments
What is MDR? What impact does it have on merchants? Who bears the cost? Should you be worried as a customer? All FAQs answered.
Merchants in India will soon be required to pay a 0.4% merchant discount rate (MDR) on UPI transactions exceeding Rs 2,000. This change, announced by the Government of India, aims to strengthen the UPI ecosystem, generate revenue for infrastructure and innovation, and improve security and customer service. The new MDR will only apply to a small fraction of transactions, affecting only 4% of all UPI payments.
Individuals making person-to-person transfers will remain unaffected, and some businesses, including those in essential sectors, will pay a flat rate of Rs 5 per transaction. The collected MDR revenue will be distributed among banks and payment service providers to support the UPI ecosystem. Customers will not be charged for UPI payments, and merchants are prohibited from passing on the MDR to their customers.
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