UPI transactions [Person-to-Merchant (P2M)] above a certain limit will attract charges from 15 October. The National Payments Corporation of India (NPCI) has revised Merchant Discount Rate (MDR) framework for select merchant payments. For merchant payments above Rs 2,000 there will be a little MDR charge, small merchants and low-value transactions will continue to remain free.
Under the revised framework, from next month, P2M UPI transactions under Rs 2K will remain free of cost for consumers. However, P2M transactions with payments above Rs 2,000 will attract 0.4 percent MDR. The MDR will be capped at Rs 300 per transaction. A flat MDR of Rs 5 per transaction will apply to UPI payments above Rs 2,000 in selected merchant categories, including railways, telecom services, insurance and fuel.
New UPI rules from 15 October: Here are 7 transactions that continue to remain free of MDR charges
Person to Person transfer
Person to Person (P2P) transactions will continue to be free of cost for both payer and beneficiary. There will be no charges for any person transferring or receiving any amount to or from any other person or even self-transfers using UPI. Whether you are transferring money to a family member, splitting a bill with friends or performing self-transfers across your own linked bank accounts, zero charges will apply.
Small merchant payment
Small merchants operating under the P2PM framework will continue with zero MDR. These small vendors receiving up to Rs 1 lakh per month through UPI QR directly into their accounts will continue to enjoy zero MDR on all transactions.
GST registration
GST registration is not required for a small merchant to qualify for zero MDR protections on UPI transactions. Eligibility for zero-rated processing under the P2PM tier is determined by monthly collection thresholds up to Rs 1 lakh per month and bank account categorisation, regardless of tax registration status.
Small ticket purchases
All person to merchant (P2M) transactions up to Rs 2,000 will remain free of MDR. An MDR of 0.4 percent will be introduced on P2M UPI transactions above Rs 2,000. For transactions of Rs 75,000 and above, the MDR will be capped at Rs 300 per transaction.
UPI auto pay
Automated recurring standing instructions known as UPI Mandates or AutoPay do not carry MDR transaction charges. Payments set up using automated recurring transfers for monthly utility bills, OTT streaming subscriptions, all recurring investments etc will be free of MDR charges.
Payment on essentials
Transactions below Rs 2,000 in essential sectors such as railways, telecom services, insurance and fuel will remain free of MDR. They will not carry MDR transaction charges.
QR code payments in rural, semi-urban locations
Zero MDR applies to QR code payments accepted by P2PM merchants in rural and semi-urban locations. All rural shopkeepers will benefit from threshold exemptions of zero MDR under Rs 2,000.
What are the daily transaction limits prescribed by banks, NPCI?
There are no monthly quotas, volume limits or tiered caps on free UPI transactions for individual consumers. Users can make as many valid P2P or P2M as necessary throughout the month without hitting a fee threshold. Daily transaction limits prescribed by banks and the National Payments Corporation of India (NPCI) range from Rs 1 lakh to Rs 5 lakh depending on the transaction category. The standard UPI daily transaction limit is Rs 1 lakh for regular P2P transfers.
