The finance ministry announced that a 0.4% merchant discount rate will apply to person-to-merchant UPI transactions above ₹2,000, while person-to-person transactions remain free irrespective of value.
For transactions of ₹75,000 and above, MDR is capped at ₹300 per transaction. The announcement ends months of discussion over charges for higher-value UPI transactions.
The government kept UPI transactions up to ₹2,000 free of MDR. Banks and payment system providers are barred from imposing direct or indirect charges on such transactions.
Small merchants receiving up to ₹1 lakh monthly through UPI QR codes under P2PM remain covered by zero-MDR. UPI Mandates/AutoPay recurring payments will not carry prescribed MDR charges.
Only 4% of merchant transactions will be affected, as most fall below ₹2,000 or qualify under P2PM exemptions.