look news india
Since the Merchant Discount Rate (MDR) framework for merchant transactions was notified by the National Payments Corporation of India (NPCI) and the Union Finance Ministry, there has been confusion among common consumers whether money will now be deducted on everyday UPI transactions. Amidst the rumors running on social media, the official data released by the government and NPCI has made the entire situation clear.
The truth is that for the common consumer, the use of UPI will remain completely free as before. The new rules will impact only select large merchant payments at the merchant level. Analysis of the data makes it clear that more than 96% of merchant transactions in the country are completely out of the scope of this new charge.
According to the official clarification from the Finance Ministry, all transactions taking place on the UPI network are divided into clear categories so that there is no financial burden on small shopkeepers and the general public:
| Transaction Type | new rule | charge on consumer | fee on merchant |
| P2P (Person to Person Transfer) | Completely free (no limits) | ₹0 (zero) | Not applicable |
| P2M (Payment to shopkeeper ≤ ₹2,000) | Zero MDR | ₹0 (zero) | ₹0 (zero) |
| P2PM (small retailers) | Full rebate on receipts up to ₹1 lakh per month | ₹0 (zero) | ₹0 (zero) |
| Large Merchants (Payment > ₹2,000) | 0.4% MDR (maximum cap ₹300) | ₹0 (zero) | 0.4% (to be borne by merchant) |
| Railways, Fuel, Telecom and Insurance | Flat fee above ₹2,000 | ₹0 (zero) | Flat ₹5 per transaction |
| Capital Market (Mutual Fund/Stock) | investment transfer | ₹0 (zero) | 0.02% (maximum ₹300) |
According to NPCI data, about 70% of the total UPI transaction value comes from person-to-person (P2P) transfers. When you send money to a friend, family member or acquaintance, whether the amount is ₹500 or ₹50,000, the zero fee rule applies.
If we talk about person-to-merchant (P2M) payments, more than 95% of everyday transactions (vegetables, milk, tea, snacks, groceries, etc.) are less than ₹2,000. Also, small street vendors and neighborhood shops registered under the ‘P2PM’ category already enjoy zero-MDR protection on total collections up to ₹1 lakh per month. This simply means that only 4% of the total merchant transactions will be covered under this 0.4% fee.
If seen from the common customer’s point of view, there is a possibility of any kind of additional charge. Zero Is.
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Stopping recovery from customer: As per rules, banks and payment gateways do not allow the merchant to pass this fee on to the customer.
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No monthly quota: There is no monthly quota, volume cap or tier system applicable for free use of UPI for general consumers.
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Charge not related to daily limit: For security reasons, the daily limit of ₹1 lakh to ₹5 lakh set by banks is only a security measure, no charge is deducted even after reaching that limit.
This new framework applies to large corporate merchants and e-commerce platforms to provide banks and tech companies with the revenue needed to maintain UPI’s servers, cyber security and financial infrastructure. Common citizens can continue using UPI as before without any fear or worry of additional charges.