New Delhi, Sep 17: The new UPI Merchant Discount Rate (MDR) framework may change the cost structure for some higher-value merchant transactions, but everyday UPI users will continue to access several key services without any direct payment charge.
The revised framework, scheduled to take effect from October 15, keeps person-to-person payments completely free and exempts merchant transactions up to ₹2,000 from MDR. The government has also clarified that the MDR is a merchant-side payment cost and cannot be passed on to customers.
1. Sending Money to Family and Friends Will Stay Free
People will continue to send money to friends, family members and other individuals through UPI without paying a transaction fee. There is no change in the treatment of person-to-person payments, regardless of the amount transferred.
This means routine activities such as splitting a restaurant bill, sending money to family or transferring funds to another individual will continue without MDR.
2. Receiving Money Through UPI Will Remain Free
Receiving money through UPI will also continue without a transaction charge for individuals. The new MDR framework is focused on specified merchant transactions and does not introduce a fee simply because an individual receives money through UPI.
3. Merchant Payments Up to ₹2,000 Stay Outside MDR
For everyday shopping and other routine purchases, UPI payments of up to ₹2,000 at merchants will remain outside the standard MDR framework.
This means consumers can continue using UPI for smaller purchases such as groceries, food, local shopping and other daily expenses without an additional payment charge.
4. Small Merchants Continue to Get Zero-MDR Support
Small businesses also receive protection under the new framework. Merchants receiving up to ₹1 lakh a month through UPI QR payments under the specified category will continue to operate with zero MDR.
The provision is particularly relevant for neighbourhood stores, street vendors and micro businesses that rely heavily on UPI for collecting payments.
5. No Monthly Fee or UPI Usage Quota for Individuals
Individuals will not face a monthly subscription fee or a separate monthly quota for using UPI under the new MDR framework. The new charges are not designed to limit how frequently consumers can use the platform.
Daily transaction limits prescribed by banks or NPCI for security and risk-management purposes are separate from MDR and should not be confused with payment charges.
UPI Continues to Remain Free for Everyday Users
The new framework therefore does not turn UPI into a paid service for consumers. The key change is the introduction of MDR for specified merchant transactions above ₹2,000, while person-to-person payments, eligible smaller merchant transactions and payments covered under the zero-MDR framework remain outside the charge.
According to the government, around 96 per cent of merchant transactions will remain unaffected by MDR. The framework is intended to create a revenue model for supporting the payment ecosystem while protecting individuals and smaller businesses from additional costs.
For millions of users who depend on UPI for everyday payments, the practical message remains straightforward: sending and receiving money continues to be free, smaller merchant payments remain outside MDR, and there is no monthly fee for using UPI.
