Overview
- The new MDR framework, announced this week and due to take effect on 15 October, applies a 0.4% charge to designated person‑to‑merchant (P2M) UPI transactions above ₹2,000.
- Consumers keep free access: person‑to‑person transfers and merchant payments up to ₹2,000 remain zero‑fee, and banks and apps are barred from charging users a platform or hidden fee.
- Small merchants that collect up to ₹1 lakh a month via QR (P2PM) are exempt, while five essential categories including railways, fuel, telecom, insurance and utilities pay a flat ₹5 on payments over ₹2,000.
- The framework also sets a ₹300 per‑transaction cap and a preferential 0.02% MDR for capital‑market payments, and it routes 5% of MDR proceeds into a development fund for smaller towns and rural acceptance.
- Key operational rules — which merchants are covered, how fees are split between banks, PSPs and apps, and enforcement to stop merchants passing charges to customers — remain to be finalised by NPCI committees as industry and political reaction continues.