- Eligible merchant UPI transactions above ₹2,000 will be subject to an MDR charge of 0.4%.
- Zero-MDR facility has been retained for P2P transactions and eligible small traders.
- The new MDR structure is likely to boost UPI security, technology and payment infrastructure.
More than 3 crore micro enterprises with monthly income below Rs 1 lakh will not have to pay any MDR charges on UPI transactions. Also, no MDR charges will be levied on UPI transactions made on Person-to-Person (P2P) basis. President of Assocham Shri Nirmal K. Minda has welcomed the new UPI framework implemented for large value merchant transactions. This new policy will strengthen the sustainability of UPI, support innovation, prevent fraud and increase its acceptance. This structure will enable the payment infrastructure and acceptance network, which will enable UPI to expand and better serve consumers and merchants across the country.
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ASSOCHAM appreciates the balanced approach of the government, under which all person-to-person UPI transactions, regardless of amount, have been made completely free. Also, merchant payments up to Rs 2,000 will also remain MDR-free. The new structure will continue to provide zero-MDR benefit to eligible small traders, particularly hawkers and local shopkeepers accepting up to Rs 1 lakh per month through UPI QR code under the person-to-person category. This will help protect micro and small businesses from additional payment costs. There are over 3 crore micro enterprises in India, whose monthly turnover is less than Rs 1 lakh, so no MDR charges will apply on UPI transactions.
Importantly, around 96% of merchant transactions will remain completely unaffected and MDR charges will apply to only 4% of person-to-person merchant transactions. This will allow a large portion of daily merchant payments to continue unabated without any MDR impact. 0.4% MDR will be applicable on certain merchant transactions above Rs 2,000, capped at a maximum of Rs 300 for transactions of Rs 75,000 and above. A fixed MDR of Rs 5 will be levied on transactions above Rs 2,000 in essential and low-profit sectors such as railways, telecom, insurance, fuel and agricultural products.
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MDR for capital market transactions with mutual funds, securities, stockbrokers and dealers will be 0.02%, capped at a maximum of Rs 300 per transaction. This will continuously encourage the adoption of digital methods in the formal financial market. The new structure provides for a dedicated fund with a share of 5% of the total MDR collection, which will be used to promote UPI usage among small merchants and widen its acceptance, particularly in rural and semi-urban areas.
Nirmal K. Minda said creating a sustainable revenue system that safeguards the interests of consumers and small merchants will support greater investment in innovation, infrastructure and payment acceptance. This will further strengthen UPI's role in accelerating India's digital transformation. This policy will support the continued growth of UPI by strengthening its reach, innovation and infrastructure. It will also help create a more sustainable and inclusive digital payments ecosystem.