If you also use UPI for every small and big thing in your daily life, then this news is a great relief for you. The new Merchant Discount Rate (MDR) framework is going to be implemented on some merchant transactions from October 15, 2026. Under this, not all traders will be charged the same, rather the rate of MDR will depend on which sector or category the trader works in. However, people have many questions regarding this new rule, but let us make it clear that there will be no charge on every UPI payment. Let us know about those 7 special types of transactions on which no MDR charge will be levied.
UPI payment will be completely free at these 7 places
- Sending money to friends and family: If you send money to any of your friends or family members through UPI, this payment will be completely free. No MDR charge will be levied for any amount on person-to-person (P2P) transfer.
- Receiving money in your bank account: You will not have to pay any MDR charge even if you receive money through UPI in your bank account. That means if someone else sends you money through UPI, no fee will be deducted from you for receiving the money.
- Payment to small shopkeepers: Small shopkeepers and street vendors of the country have been given great relief in the new MDR rules. For small businessmen receiving payments up to Rs 1 lakh per month through UPI QR code falling under the Person-to-Person-Merchant (P2PM) category, all transactions will be completely zero charge i.e. free.
- General purchases up to Rs 2,000: If you make payment up to Rs 2,000 to any businessman, no MDR charge will be levied on it. All transactions up to Rs 2,000 under the person-to-merchant (P2M) category have been kept out of the scope of this charge.
- Shopping below Rs 2,000 from big retailers: If you make a purchase of less than Rs 2,000 from a general or big shopkeeper, there will be no MDR charge on that also. Yes, MDR of up to 0.4% may be applicable on some select payments above Rs 2,000, but keep in mind that this charge will have to be paid by the merchant and not a single penny will be deducted from the customer's pocket.
- Features of UPI AutoPay: If you have set up UPI AutoPay for payment of any of your subscriptions, OTT or bills, then this facility will also be completely free from MDR charges. This means that there will be no additional charges on these recurring regular auto payments.
- Essential and low-profit services: No MDR will be levied on payments of less than Rs 2,000 in essential services sectors like railways, telecom, insurance, fuel and agricultural inputs. Small transactions related to all these essential sectors have been completely kept within the scope of zero MDR.