UPI MDR: Which 5 categories will attract flat Rs 5 fee above Rs 2,000? Person to person transaction is free
Xtreme News India
16-09-2026 18:18:45
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UPI MDR: Which 5 categories will attract flat Rs 5 fee above Rs 2,000? Person to person transaction is free
New Delhi (Special correspondent) - The government has clarified which UPI merchant transactions will attract a flat ₹5 Merchant Discount Rate (MDR) under the new framework, while reiterating that person-to-person UPI payments will continue to remain free. Under the framework, UPI transactions above ₹2,000 in certain essential and thin-margin sectors will attract a flat MDR of ₹5 per transaction. The categories include railways, telecommunications, insurance, fuel and agricultural inputs. Person to person transaction is free.
The flat MDR is intended to provide cost certainty for critical public services and businesses operating on narrow margins, according to the government.
Fuel
Agricultural inputsThe MDR will apply within the merchant payment ecosystem and will be shared among payment ecosystem participants, including banks, payment service providers and UPI application providers.
The government said MDR is not a charge imposed on customers making UPI payments. Banks have been advised to ensure that merchants do not pass the MDR cost on to customers.
UPI application providers have also been prohibited from imposing platform fees or hidden charges, according to the framework.
Payments to merchants up to ₹2,000 will continue to remain free of MDR. Small merchants receiving up to ₹1 lakh per month through UPI QR codes under the Person-to-Person-Merchant category will also continue to get zero MDR on all transactions.
The government said approximately 96% of merchant transactions will remain unaffected, with MDR expected to apply to around 4% of merchant transactions.
All person-to-person UPI transactions will continue to remain completely free, irrespective of the amount transferred. The government also clarified that there will be no monthly quotas, volume restrictions or tiered caps on free UPI transactions.
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