Daijiworld Media Network - New Delhi

New Delhi, Sep 16: A revised Unified Payments Interface (UPI) Merchant Discount Rate (MDR) framework has been introduced for select merchant transactions, effective October 15. However, the new guidelines ensure that UPI usage will remain completely free of cost for consumers.

According to the framework, person-to-person (P2P) and person-to-merchant (P2M) transactions up to Rs 2,000 will remain entirely outside the scope of the MDR. Small merchants operating under the person-to-person merchant (P2PM) category, who receive up to Rs 1 lac per month through UPI QR payments directly into their bank accounts, will continue to benefit from zero MDR. This exemption means that over 95% of all low-value UPI P2M transactions will be unaffected.

For higher value payments, an MDR of 0.4% will be applicable on P2M UPI transactions exceeding Rs 2,000, with a maximum cap of Rs 300 per transaction. Additionally, a flat MDR of Rs 5 per transaction will be levied on UPI payments above Rs 2,000 in specific merchant categories such as railways, telecom services, insurance, and fuel.

To further accelerate the adoption of digital payments, the initiative proposes the establishment of a dedicated fund. This fund will support digital payment infrastructure for existing merchants, particularly focusing on tier 3 and smaller markets.

The revenue generated from the reasonable MDR charges on high-value transactions will be distributed among UPI ecosystem players to fund expansion, cybersecurity, and continuous innovation. Authorities noted that the revised UPI MDR remains significantly lower than the charges associated with other digital payment instruments, including credit cards, debit cards, and digital wallets.