The new UPI merchant fee: What changes, what doesn’t
Starting October 15, merchants will pay a fee — the merchant discount rate (MDR) — on UPI payments above Rs 2,000, ending six years of zero MDR. The NPCI’s FAQs, released on Tuesday, spell out who pays, who is exempt, and why. Here is what changes, and what doesn’t, for consumers and merchants
What exactly has been announced?
An MDR of 0.4% on person-to-merchant (P2M) UPI payments above Rs 2,000, payable by the merchant to its acquiring bank. For transactions of Rs 75,000 and above, the fee is capped at Rs 300. Payments up to Rs 2,000 — over 95% of P2M volume — attract no charge. The framework takes effect on October 15, giving banks, payment aggregators, and fintech apps time to update systems.
