Payments made to merchants up to ₹ 2,000 will also remain free. The new Unified Payments Interface framework will not mean a charge on people for using UPI, the government has clarified. UPI payments between two individuals will remain completely free, no matter how much money is transferred.
MDR, or Merchant Discount Rate, is a charge within the payment ecosystem. There will be no monthly quota, volume restriction or tiered cap on free UPI transactions. The government said person-to-person (P2P) transactions account for about 70% of the total value of UPI transactions and will remain outside the MDR framework. For specified merchant transactions above ₹ 2,000, MDR will apply. A ₹ 10,000 merchant transaction may attract MDR within the payment ecosystem, but the customer is not supposed to be charged the MDR. The government said small merchants, including street vendors and neighbourhood shops, receiving up to ₹ 1 lakh per month through UPI QR codes under the P2PM category will continue to enjoy zero MDR on all transactions. Earlier reporting noted: Modi government’s loot has reached UPI, says Congress; BJP hits back The Congress on Tuesday accused the government of breaking its own promise of keeping the United Payment Interface free of fees after a notification issued the day before paved the way for a Merchant Discount Rate charge on UPI transactions above ₹ 2,000.
Because they are either below ₹ 2,000 or covered by the zero-MDR framework for small merchants, the government said around 96% of merchant transactions will remain unaffected.
The government said customers will not have to pay a charge for these transactions. It is not a tax and is not money collected by the government or NPCI, the government said. No, according to the government’s clarification. The government said the lower rate is intended to support continued retail participation in financial markets. The government said individuals will continue to have unlimited free UPI usage. Earlier reporting noted: Leader of Opposition in the Lok Sabha Rahul Gandhi said the move breaks the government’s promise of a free UPI system and accused it of “surrendering to American pressure” on digital payments. “The Modi government’s loot has now reached UPI,” Congress chief Mallikarjun Kharge said in a statement. “‘No fees on UPI’ has been changed to ‘no fees on UPI transactions up to ₹ 2,000.’” Earlier reporting noted: On Tuesday evening, the government introduced a 0.4% transaction fee on payments above ₹ 2,000, capped at ₹ 300 for payments of ₹ 75,000 and above, from October 15, while explicitly ring-fencing everyday person-to-person transfers from any charge.
