MDR on large value transactions to strengthen UPI's long-term sustainability: RBI

The Reserve Bank of India on Tuesday said the introduction of Merchant Discount Rate MDR on largevalue Unified Interface Payments UPI transactions is an important step towards strengthening the longterm sustainability of Indias digital payments ecosystemThe government on Tuesday had introduced 04 per cent charge on UPI payments above Rs 2000 to merchants and capped the fee at Rs 300 for payments of Rs 75000 and above from October 15 The move ended nearly six years of fully free UPI payments according to news agency PTIMDR to help UPIIt will help UPI in continuing to scale innovate and serve consumers and businesses across the country the Reserve Bank of India RBI said in a post on XThe introduction of MDR on largevalue UPI transactions ie above 2000 is an important step towards strengthening the longterm sustainability of Indiarsquos digital payments ecosystem It will help UPI in continuing to scale innovate and serve consumers and businesses across the country A fair and appropriate distribution of MDR across ecosystem participants will support continued investment in technology infrastructure and acceptance networks This in turn can enable wider UPI acceptance deepen the customer base and support sustained growth in transaction volumes Importantly all UPI transactions P2P and P2M shall remain free for users P2M UPI transactions below 2000 will continue to remain free for merchants while MDR may be levied on merchants for P2M RBI remains committed to ensuring that UPI continues to be safe seamless affordable and accessible while supporting the longterm sustainability and growth of Indiarsquos worldclass digital payments ecosystemmdash ReserveBankOfIndia RBI September 15 2026The apex bank noted that a fair and appropriate distribution of MDR across ecosystem participants will support continued investment in technology infrastructure and acceptance networksThis in turn can enable wider UPI acceptance deepen the customer base and support sustained growth in transaction volumes it saidThe regulator highlighted that all UPI transactions both PersontoPerson P2P and PersontoMerchant P2M shall remain free for users adding that P2M UPI transactions below Rs 2000 will continue to remain free for merchantsRBI remains committed to ensuring that UPI continues to be safe seamless affordable and accessible while supporting the longterm sustainability and growth of Indias worldclass digital payments ecosystem it addedOperated by National Payments Corporation of India NPCI UPI is used for realtime payments between peers or at merchants end while making purchasesNPCI an initiative of the Reserve Bank of India RBI and the Indian Banks Association is an umbrella organisation for operating retail payments and settlement systems in IndiaWith presence in over 11 countries including Uzbekistan Singapore the United Arab Emirates France Mauritius Nepal Bhutan Qatar Sri Lanka Cambodia and Greece UPI has transformed Indias digital payments landscape In terms of transaction value it has soared from Rs 007 lakh crore in FY17 to around Rs 314 lakh crore in FY26 registering a more than 4000fold increase over the decadeCustomers will not be required to pay any chargeThe government clarified that the charges are applicable to merchants and said Customers will not be required to pay any charge when making such payments through UPI the finance ministry said in a statement quoting the NPCI circular issued on TuesdayMDR is a charge within the merchant payment ecosystem It is not a charge on customers making UPI payments the statement addedAccording to PTI MDR of 04 per cent will be levied on Person to Merchant transactions above Rs 2000 while MDR will be capped at Rs 300 per transaction on highvalue payments of Rs 75000 and above Essential sectors like telecom insurance fuel sectors will pay a flat MDR of Rs 5 per transaction while payments towards mutual funds and stock brokers will attract an MDR of 002 per cent capped at Rs 300However small merchants receiving up to Rs 1 lakh per month will have mandatory zero MDR for all transactionsWith inputs from PTI