UPI MDR from Oct 15: Will your SIP, automated insurance payments cost more?

The payment method matters: One-time UPI transactions and automated mandates will be treated differently under the new framework

If you make your mutual fund SIP payment through UPI AutoPay, you do not need to worry about the new merchant discount rate (MDR) framework making your monthly investment more expensive.

The National Payments Corporation of India (NPCI), in its “frequently asked questions” (FAQs) issued on September 15, has said that UPI AutoPay and other recurring UPI mandates will not attract the prescribed MDR. This covers recurring payments such as mutual fund systematic investment plans (SIPs), insurance premiums, utility bills and OTT subscriptions.

The new MDR framework will take effect from October 15. However, the important point for consumers is that MDR is a charge within the merchant payment ecosystem and not a fee for UPI users.

NPCI's existing UPI AutoPay framework allows users to set up recurring payments for services including mutual funds, insurance, electricity bills, EMIs and OTT subscriptions.

SIPs through UPI AutoPay remain outside MDR

For mutual fund investors, the payment method will determine whether the new framework is relevant.