UPI fee exemption rules
New UPI fee framework exempts 96% of merchant transactions from extra charges.
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Finance Minister Nirmala Sitharaman said a 0.4% merchant discount rate on specified UPI merchant transactions above ₹2,000 is a charge paid by merchants, not a government tax, cess or surcharge. She said it will not be added to customers’ bills, comparing it with merchant fees on card payments, and said the proceeds will be shared among payment-system participants such as banks, the National Payments Corporation of India and service providers. The framework leaves person-to-person transfers and transactions up to ₹2,000 outside the charge; the government estimates about 96% of merchant UPI transactions will be unaffected. Sitharaman’s comments came amid public and opposition concerns about the revised framework.
Key Points
1
The revised MDR framework is scheduled to take effect on October 15, 2026.
2
For specified merchant transactions of ₹75,000 or more, the MDR is capped at ₹300; separate rates are prescribed for certain categories, including essential services and capital-market transactions.
3
The Finance Ministry said banks had been advised to ensure merchants do not pass the MDR on to customers.
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