UPI MDR charges kick in for large merchants from October 15

A new merchant discount rate structure comes into effect on UPI payments from October 15, marking a significant shift in India's digital payments ecosystem. The measure will apply only to transactions exceeding ₹2,000 made to large merchants, while maintaining a zero-fee framework for individual customers and eligible small traders.

Under the revised framework, customers making UPI payments will face no additional charges regardless of transaction size. Small merchants and vendors, classified under specific criteria, will also continue to benefit from zero-fee transactions, ensuring that the push toward digital adoption at the grassroots level remains unaffected.

Large merchants, however, will see MDR applied to payments above the ₹2,000 threshold. This differentiated approach aims to balance multiple objectives: generating revenue from high-value commercial transactions while preventing charges that might discourage everyday digital payments by consumers.

The Reserve Bank of India and the National Payments Corporation of India have implemented the changes to ensure sustainable growth of the UPI ecosystem. Industry observers note the move reflects efforts to create a more structured payment landscape while maintaining incentives for broader digital adoption across India's diverse merchant base.

Merchants and customers are advised to familiarize themselves with the new structure to avoid surprises when making or receiving payments from the implementation date.