UPI MDR: Which 5 categories will attract flat Rs 5 fee above ₹2,000?

As per the latest business developments, 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 keep stay 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.

The flat MDR is intended to provide cost certainty for critical public services and businesses operating on narrow margins, according to the government.

Which categories will attract ₹5 flat MDR?

The following sectors will attract a flat ₹5 MDR on UPI merchant transactions above ₹2,000:

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.

Will customers have to pay the ₹5 fee?

No. The government stated 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 additionally been prohibited from imposing platform fees or hidden charges, according to the framework.

What around other UPI merchant payments?

For other person-to-merchant transactions above ₹2,000, a nominal MDR of 0.4% will apply. For transactions of ₹75,000 and above, the MDR will be capped at ₹300 per transaction.

Payments to merchants up to ₹2,000 will keep stay free of MDR. Small merchants receiving up to ₹1 lakh per month through UPI QR codes under the Person-to-Person-Merchant category will additionally keep get zero MDR on all transactions.

The government stated approximately 96% of merchant transactions will stay unaffected, with MDR anticipated to apply to around 4% of merchant transactions.

All person-to-person UPI transactions will keep stay completely free, irrespective of the amount transferred. The government additionally clarified that there will be no monthly quotas, volume restrictions or tiered caps on free UPI transactions.