What You Need to Know About Upcoming Changes to UPI Transaction Fees
In New Delhi, merchants are currently waiting for the National Payments Corporation of India (NPCI) to announce a new date for the implementation of Merchant Discount Rate (MDR) charges on specific person-to-merchant (P2M) Unified Payments Interface (UPI) transactions. The NPCI had postponed the introduction of these charges, which were initially set to begin on October 15, to prevent additional costs during the festive season.
With Diwali festivities concluded and Bhai Dooj approaching on November 11, both merchants and customers are eager for details regarding the new implementation date. The UPI and Services Steering Committee had previously decided that MDR charges would take effect right after Diwali, with the specific date to be communicated later. According to NPCI's FAQs, a 0.4% MDR will apply to eligible P2M UPI transactions exceeding Rs 2,000, with a maximum charge of Rs 300 for transactions of Rs 75,000 or more.
For example, if a merchant receives a UPI payment of Rs 1 lakh, they would typically incur a 0.4% fee of Rs 400; however, due to the cap, the MDR would be limited to Rs 300. Certain merchant categories, such as railways, telecom, insurance, and fuel, will have a reduced flat MDR of Rs 5 per transaction for payments over Rs 2,000, instead of the standard percentage-based fee.
Additionally, capital market transactions will have a concessional MDR of 0.02%, which includes payments for mutual funds, securities, stockbrokers, and dealers, also capped at Rs 300. It's important to note that the MDR is a fee charged to the merchant receiving the payment, and customers making UPI transactions will not be impacted. The NPCI has confirmed that UPI transfers between individuals will remain free, as the proposed MDR will not apply to person-to-person (P2P) UPI transfers.