Reports regarding the implementation of a Merchant Discount Rate (MDR) on select UPI transactions starting October 15 have raised concerns among consumers. However, charges will not apply to all UPI transactions. Person-to-person (P2P) transfers and routine merchant payments up to ₹2,000 will continue to remain entirely free. Here is a detailed look at who will be affected by the new UPI charges, how much fee applies, and what services remain free for consumers.
The upcoming system does not levy charges on every digital transfer. MDR will strictly apply only to select commercial merchant transactions. Officials have clarified that retail consumers will not be required to pay any direct out-of-pocket transaction fees. Transfers made to friends or family members using UPI will not carry any fee regardless of the transaction value. All person-to-person transfers will remain free.
For retail purchases up to ₹2,000 at shops and commercial establishments, no additional charges will be imposed. For instance, buying goods worth ₹1,000 will require paying exactly ₹1,000 via UPI. Under the new guidelines, a 0.4% MDR will be levied solely on merchants for large commercial transactions exceeding ₹2,000.
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