New UPI regime from Oct 15: Nominal fee on large merchant transactions, person-to-person transactions to remain free

The government decision to levy 0.4% fee on Rs 2,000 plus transactions made to merchants via UPI has triggered a debate around objectives of the move and whether this will harm consumers.

Here’s an explainer on what the move effective from October 15 entails.

What is changing

India so far has a zero fee regime on UPI transactions but from October 15, 0.4 % Merchant Discount Rate (MDR) will be introduced on UPI transactions worth over Rs 2,000 to merchants: MDR on transactions of Rs 75,000 and above will be capped at Rs 300.