Industry Odisha Bureau, Sept 16: A new Merchant Discount Rate (MDR) framework for select UPI payments will come into effect from October 15. However, customers will not have to pay the charge directly.
Under the new framework, a 0.4% MDR will apply to person to merchant (P2M) UPI transactions above Rs 2,000. The charge will be paid within the merchant side payment ecosystem and will be capped at Rs 300 for transactions of Rs 75,000 or more.
For example, a Rs 3,000 UPI payment would attract an MDR of Rs 12, while a Rs 50,000 payment would attract Rs 200. Similarly, a Rs 1 lakh transaction would still attract a maximum of Rs 300 as MDR.
The government has clarified that merchants cannot pass the MDR directly to customers as a separate UPI fee. Meanwhile, UPI apps cannot impose platform or hidden charges. Person to person UPI transfers will also remain free regardless of the amount.
Most everyday payments will continue to remain unaffected. UPI payments to merchants of up to Rs 2,000 will continue to carry zero MDR. Small merchants receiving up to Rs 1 lakh a month through UPI QR codes under the P2PM category will also continue to get zero MDR on their transactions.
Certain sectors, including railways, telecom, insurance, fuel and agricultural inputs, will attract a flat Rs 5 MDR for transactions above Rs 2,000. Capital market payments will have an MDR of 0.02%, capped at Rs 300.
The government says the framework is intended to support the long term sustainability of UPI and its payment infrastructure. It estimates that only about 4 percent of merchant transactions will attract MDR, leaving around 96% unaffected.
