NPCI Sets 0.4% MDR On P2M UPI Transactions Over ₹2,000

After months of anticipation, UPI operator National Payments Corporation of India (NPCI) has introduced the merchant discount rate (MDR) fees framework for select high-value UPI transactions. MDR on UPI will take effect precisely one month from today, that is, October 15. 

Under the framework, standard person to merchant (P2M) transactions above ₹2,000 will attract an MDR of 0.4%, capped at ₹300 for high-value payments of ₹75,000 and above. However, peer-to-peer (P2P) transactions will continue to be free.

Further, small merchants, including street vendors, receiving up to ₹1 Lakh per month through UPI QR codes under the person to person merchant (P2PM) category will continue to enjoy zero MDR on all transactions

The Ministry of Finance, in a statement, said that the framework protects individuals, micro-enterprises and small businesses while introducing a limited charge on larger merchant transactions.

“Data analysis indicates that MDR will apply to only about 4% of merchant transactions. This means that approximately 96% of merchant transactions will remain unaffected, as they are either below the ₹2,000 threshold or covered by the zero-MDR framework for small merchants,” the statement read.

Specific merchant categories — railways, telecom, insurance and fuel — will operate on a flat fee of ₹5 for payments exceeding ₹2,000, in order to maintain low costs for critical public services, utility bill collection, thin-margin sectors like fuel retail, and other essential consumer services

Additionally, capital market transactions will incur a lower rate of 0.02%, capped at ₹300, to encourage participation in the markets ecosystem. This applies to payments towards mutual funds, stockbrokers, securities dealers, and investment platforms. 

“Most global payment systems (including Digital Public Infrastructures) have economic models that support infrastructure and innovation. India’s approach continues to prioritise accessibility, scale and inclusion,” said the NPCI.

(The story will be updated shortly)

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