UPI MDR explained: what the 0.4% charge from Oct 15 means
From October 15, a 0.4 percent merchant discount rate applies to specified UPI merchant payments above Rs 2,000. The charge has raised questions about whether everyday UPI payments will cost more.
The key detail: it applies only to person-to-merchant payments above Rs 2,000, not to peer-to-peer transfers, which remain free. Small merchants doing under Rs 1 lakh a month are exempt.
The rate is capped at Rs 300 for transactions of Rs 75,000 and above. Essential services like railways, telecom, insurance, fuel and farm inputs attract a flat Rs 5. Capital market payments get a 0.02 percent rate.
Utility bills, OTT subscriptions and recurring auto-debit payments carry no MDR. The government says 96 percent of gateway transactions stay free, and the charge is borne within the payment ecosystem.
The Supreme Court declined an interim stay on September 28 and will hear the case next on October 13. Until then, most users will notice no change in how they pay.
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