But while the framework introduces a 0.4% merchant discount rate (MDR) on specified merchant transactions above ₹ 2,000, customers will not be charged MDR, according to the government. The new UPI framework has kicked in, bringing changes to how certain merchant transactions are charged.
So, what happens when you scan a QR code to pay for fuel, renew an insurance policy or book a railway ticket? Here are some key questions answered: A government press release listing the FAQs has stated that the banks have been advised to ensure that merchants do not pass MDR charges on to customers. “Educational fee collections, including school tuition, university term fees, and institutional entrance examinations, fall under designated Industry program category. The framework seeks to strengthen the long-term sustainability of UPI while keeping payments free for individuals and protecting small merchants, the government stated. UPI payments between two individuals will remain completely free, no matter how much money is transferred.
Transactions above ₹ 2,000 benefit from flat-fee structures or capped processing rates, preventing high percentage-based fees on large fee amounts. Educational transactions up to ₹ 2,000 remain completely free of MDR. MDR will apply to only about 4 per cent of merchant transactions**, while approximately 96 per cent will remain unaffected, according to the government. The central government said the framework has been introduced under the Payment and Settlement Systems Act, 2007, following detailed deliberations by the UPI Steering Committee on the applicable rates, operational arrangements and consumer safeguards. 5 things that remain free The new Unified Payments Interface framework will not mean a charge on people for using UPI, the government has clarified. Payments made to merchants up to ₹ 2,000 will also remain free. Earlier reporting noted: From October 15, merchants accepting UPI payments above ₹ 2,000 will pay a fee under the new framework, but customers will not have to pay this charge. Earlier reporting noted: 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.
“UPI application providers are expressly prohibited from imposing platform fees or hidden charges,” the press release stated. This measure ensures schools, colleges, and students can process tuition fees digitally without heavy administrative fees,” according to the government.
Earlier reporting noted: New UPI charges: Will you pay for sending money or shopping? The clarification from the government came on Tuesday after confusion over the new framework and whether people would have to pay for making UPI payments.
