UPI MDR Charges: Diwali is over! From when will charges apply to payments exceeding ₹2000? Get the latest update..

UPI MDR Charges: The festival of Diwali has concluded, and discussions regarding the Merchant Discount Rate (MDR) on UPI payments have intensified. The National Payments Corporation of India (NPCI) had initially planned to implement these charges starting October 15.

However, the decision was deferred in light of the festive season. On October 13, the NPCI stated that the new rates would come into effect shortly after Diwali, with the specific date to be announced separately. A new date is currently awaited.

What are the charges for payments exceeding ₹2,000?

According to the FAQs released by the NPCI on September 15, an MDR of 0.4% will be applied to UPI payments made to select merchants. This charge applies to transactions exceeding ₹2,000. However, a maximum cap of ₹300 has been set for payments of ₹75,000 or more.

For instance, if a customer makes a UPI payment of ₹1 lakh to a merchant, the 0.4% charge would amount to ₹400; however, due to the maximum cap, the merchant will only be required to pay an MDR of ₹300.

Different rates have been established for specific categories, such as railways, telecommunications, insurance, and fuel. For these, a flat charge of ₹5 per transaction will apply to payments exceeding ₹2,000. Meanwhile, payments related to mutual funds, shares, and stock brokers will be subject to an MDR of 0.02%, also capped at a maximum of ₹300.

Will customers have to pay these charges?

No. The MDR is to be borne by the merchant—the entity receiving the payment. It will not impose a direct burden on the customer; in other words, these charges do not apply to individuals making payments via UPI.

Furthermore, MDR does not apply to UPI transfers between individuals. Sending money to family members, splitting bills with friends, or transferring funds between one's own bank accounts will remain free of charge, just as it has been until now. When will the new rates come into effect?

The NPCI has not yet announced a specific date. However, it had indicated that the new rates would be implemented shortly after Diwali. Given this, it is likely that they will come into effect this month; however, the exact date has not yet been determined.

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