UPI MDR charges: What consumers need to know about the change in rules

New UPI MDR rules will apply to select merchant transactions, but consumers can continue using UPI for daily payments, QR payments and AutoPay without transaction charges

The government on Tuesday introduced a 0.4 per cent merchant discount rate (MDR) on Unified Payments Interface (UPI) payments above ₹2,000 to merchants, with the fee capped at ₹300 for payments of ₹75,000 and above.

The National Payments Corporation of India (NPCI), which operates UPI, said person-to-merchant (P2M) transactions up to ₹2,000 will remain free of costs. Essential sectors such as railways, telecom and fuel will attract a flat ₹5 fee per transaction, while capital-market transactions will attract a lower rate of 0.02 per cent.

The introduction of MDR on select UPI transactions may have raised concerns among users. To address any confusion or concerns, NPCI has answered several questions in its FAQ document.

Will consumers have to pay for making UPI payments?

NPCI has clarified that UPI services will continue without any cost to consumers. Individual account holders can continue using UPI applications for all routine and daily expenses without worrying about charges. NPCI has also clarified that UPI application providers shall not charge platform fees or any other charges for payments made through UPI. UPI applications are explicitly restricted from levying platform fees on UPI transactions. ALSO READ: UPI payments up to ₹2,000 to remain free: What it means for users

Will sending money to friends or family attract a charge?

Person-to-person (P2P) transactions, such as sending money to friends, family or personal contacts, will remain free for both the payer and beneficiary.