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Modi Government Announces New UPI Rules and MDR Charges After Diwali
- •The National Payments Corporation of India announced that the Merchant Discount Rate for certain Person-to-Merchant UPI transactions will be introduced right after Diwali.
- •The decision was finalized by the UPI and Services Steering Committee on October 13, keeping the festive season in mind.
- •A 0.4 percent MDR will apply to P2M UPI transactions exceeding Rs 2000, and this charge will be borne by merchants rather than customers.
- •Person-to-Person UPI transactions and most everyday merchant transactions will continue to remain completely free of cost as before.
- •The funds raised from these charges will help cover infrastructure costs, system reliability, cybersecurity, and fraud prevention for operating UPI.
Key Questions Answered
The National Payments Corporation of India (NPCI) announced that a Merchant Discount Rate (MDR) of 0.4% will apply to certain Person-to-Merchant (P2M) UPI transactions exceeding Rs. 2,000 right after Diwali. For transactions of Rs. 75,000 or more, the maximum limit of this charge is capped at Rs. 300.
No, ordinary customers will not bear any charges; Person-to-Person (P2P) transfers and everyday merchant transactions remain completely free. Furthermore, small merchants and street vendors who receive up to Rs. 1 lakh per month through UPI QR codes continue to enjoy zero MDR.
According to the Ministry of Finance, running UPI services costs around Rs. 20,000 crore annually, making it financially unsustainable in the long term. The funds raised will cover critical infrastructure costs, including system reliability, cybersecurity, fraud prevention, and customer service.
