Govt Introduces 0.4% MDR On Large UPI Merchant Payments, Caps Fee At ₹300

New Delhi, Sep 15: The government on Tuesday set a 0.4 per cent charge on UPI payments above Rs 2,000 to merchants and capped the fee at Rs 300 for payments of Rs 75,000 and above as it rolled out a framework for large digital merchant payments.

New UPI fee framework announced

The move ends the zero-MDR regime that has been in place since January 2020, introduced to drive digital payments adoption but long criticised by banks and fintechs as unsustainable.

Essential sectors like railways, telecom and fuel get a flat Rs 5 fee per transaction, while capital markets get a lighter 0.02 per cent rate.

Small merchants earning up to Rs 1 lakh a month via UPI QR codes stay fully exempt - a carve-out the government says shields 96 per cent of merchant transactions from any new charge, an official statement said.

Charges capped for large payments

Merchant Discount Rate (MDR) on person-to-merchant (P2M) UPI transactions above Rs 2,000 have been capped at Rs 300 for payments of Rs 75,000 and above.

Person-to-person transfers - 37 per cent of UPI's volume and 70 per cent of its value - remain untouched.

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Safeguards for users

App providers are barred from adding platform fees, and banks have been told not to let merchants pass MDR costs to customers. A fifth of the new fee pool will fund small-merchant UPI expansion.

(Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)