UPI MDR: What Consumers and Merchants Need to Know: UPI remains free for consumers. MDR, a fee paid by a merchant for accepting card or digital payment from a customer, has been introduced on select UPI merchant transactions.
What does this mean for Consumers:
- Sending money to family and friends via UPI remains completely free
- Paying any merchant through UPI for any amount remains free
- Whether you’re shopping at a store, paying at a local market, or scanning a QR code at a street vendor, it remains free
- Merchants cannot pass MDR on to customers
What does this mean for Merchants:
- Zero MDR or no fee on all UPI merchant payments up to ₹2,000, making 96% of merchant transactions free.
- Small merchants like street vendors, neighbourhood shops, and small businesses, receiving up to ₹1 lakh per month through UPI QR codes in their bank accounts, will continue to enjoy zero MDR.
- 0.4% MDR on eligible merchant transactions above ₹2,000.
- For transactions of ₹75,000 and above, MDR is capped at ₹300 per transaction.
What are the special MDR rates for essential services:
- Payments below ₹2,000 will continue with zero MDR
- Payments above ₹2,000 for fuel, education, insurance, railways, telecom and utility services (electricity, water and piped natural gas) among others, will attract a flat MDR of ₹5 per transaction.
