{"id":33207,"date":"2026-09-24T00:25:37","date_gmt":"2026-09-23T18:55:37","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=33207"},"modified":"2026-09-24T01:29:39","modified_gmt":"2026-09-23T19:59:39","slug":"what-is-upi-mdr-and-why-is-it-being-introduced","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/","title":{"rendered":"What is UPI MDR) and Why Is It Being Introduced?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6ab46ebeb13dd\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6ab46ebeb13dd\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#What_is_UPI_MDR_Merchant_Discount_Rate_and_why_is_it_being_introduced\" title=\"What is UPI MDR (Merchant Discount Rate), and why is it being introduced?\">What is UPI MDR (Merchant Discount Rate), and why is it being introduced?<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#What_is_MDR\" title=\" What is MDR?\"> What is MDR?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#What_remains_FREE\" title=\" What remains FREE?\"> What remains FREE?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#Small_Merchant_Protection\" title=\" Small Merchant Protection: \"> Small Merchant Protection: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#Large_Merchant_MDR\" title=\" Large Merchant MDR\"> Large Merchant MDR<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#Special_Sectors\" title=\" Special Sectors:\"> Special Sectors:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#Capital_Market_Transactions\" title=\" Capital Market Transactions: \"> Capital Market Transactions: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#Important_Clarification\" title=\" Important Clarification: \"> Important Clarification: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#Why_is_it_being_introduced\" title=\" Why is it being introduced?\"> Why is it being introduced?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#UPI_%E2%89%A0_New_Charges_for_Everyone_Complete_Explanation\" title=\"UPI \u2260 New Charges for Everyone! | Complete Explanation\">UPI \u2260 New Charges for Everyone! | Complete Explanation<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#What_Does_%E2%80%9C96_of_Merchant_Payments_Remain_Unaffected%E2%80%9D_Mean\" title=\"What Does &#8220;96% of Merchant Payments Remain Unaffected&#8221; Mean?\">What Does &#8220;96% of Merchant Payments Remain Unaffected&#8221; Mean?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#What_Remains_Completely_Free\" title=\"What Remains Completely Free?\">What Remains Completely Free?<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#For_Individual_Users\" title=\"For Individual Users\">For Individual Users<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#Examples\" title=\"Examples\">Examples<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#Protection_for_Small_Merchants\" title=\"Protection for Small Merchants\">Protection for Small Merchants<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#Key_Takeaway_%E2%80%93_Practical_Conclusion\" title=\"Key Takeaway &#8211; Practical Conclusion\">Key Takeaway &#8211; Practical Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#UPI_MDR_FREE_ERA_ENDS_MONEY_TRAIL_BEGINS\" title=\"UPI MDR: FREE ERA ENDS | MONEY TRAIL BEGINS\">UPI MDR: FREE ERA ENDS | MONEY TRAIL BEGINS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/carajput.com\/blog\/what-is-upi-mdr-and-why-is-it-being-introduced\/#Bottom_Line\" title=\"Bottom Line\">Bottom Line<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-33209\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/What-is-MDR.jpg\" alt=\"UPI MDR (Merchant Discount Rate)\" width=\"1254\" height=\"1254\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/What-is-MDR.jpg 1254w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/What-is-MDR-300x300.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/What-is-MDR-1024x1024.jpg 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/What-is-MDR-150x150.jpg 150w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/What-is-MDR-768x768.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/What-is-MDR-800x800.jpg 800w\" sizes=\"(max-width: 1254px) 100vw, 1254px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_UPI_MDR_Merchant_Discount_Rate_and_why_is_it_being_introduced\"><\/span><span style=\"color: #000080;\">What is UPI MDR (Merchant Discount Rate), and why is it being introduced?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"What_is_MDR\"><\/span><span style=\"color: #000080;\"><strong> What is MDR?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div>\n<p>Merchant Discount Rate (MDR) is a fee paid by merchants to banks and payment service providers for processing digital payment transactions. The proposed MDR framework aims to support:<\/p>\n<ul>\n<li>UPI infrastructure development<\/li>\n<li>Cybersecurity enhancements<\/li>\n<li>Fraud monitoring systems<\/li>\n<li>Merchant onboarding and support<\/li>\n<li>Sustainable growth of the UPI ecosystem<\/li>\n<\/ul>\n<p>The objective is to create a long-term funding model for managing the rapidly growing UPI transaction network<\/p>\n<\/div>\n<h3><span class=\"ez-toc-section\" id=\"What_remains_FREE\"><\/span><span style=\"color: #000080;\"><strong> What remains FREE?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div>\n<p>UPI remains completely free for consumers.\u00a0The proposed MDR framework does <strong>not<\/strong> impose any charges on individual users making UPI payments. Customers will continue enjoying free UPI services just as they do today. Consumer UPI Payments : here we clearly states: Consumer UPI remains free, P2P (Person-to-Person) transfers remain free, UPI apps cannot charge users a platform fee. QR code scanning remains free for customers.\u00a0 Examples Free: Sending INR 50,000 to a friend. And Paying rent to a family member. Transferring money between your own bank accounts.<\/p>\n<\/div>\n<h3><span class=\"ez-toc-section\" id=\"Small_Merchant_Protection\"><\/span><span style=\"color: #000080;\"><strong> Small Merchant Protection: <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Special relief for small merchants.: \u00a0Small Merchant Category (P2PM) : Merchants receiving up to INR 1 lakh per month through UPI QR continue to enjoy: Zero MDR : This means Kirana stores, Small retailers, Local businesses and Rural merchants remain unaffected if they fall within the prescribed limit.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Large_Merchant_MDR\"><\/span><span style=\"color: #000080;\"><strong> Large Merchant MDR<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>For larger merchants: MDR = 0.4%. Applicable on Merchant payments above INR 2,000, However,\u00a0 0% MDR up to INR 2,000 and 0.4% MDR above INR 2,000. Maximum MDR capped at INR 300 per transaction. For Example<\/p>\n<table style=\"height: 370px;\" width=\"795\">\n<tbody>\n<tr>\n<td width=\"232\">Transaction Value<\/td>\n<td>MDR<\/td>\n<\/tr>\n<tr>\n<td width=\"232\">INR 1,500<\/td>\n<td>Nil<\/td>\n<\/tr>\n<tr>\n<td width=\"232\">INR 5,000<\/td>\n<td>INR 20<\/td>\n<\/tr>\n<tr>\n<td width=\"232\">INR 25,000<\/td>\n<td>INR 100<\/td>\n<\/tr>\n<tr>\n<td width=\"232\">INR 75,000<\/td>\n<td>INR 300<\/td>\n<\/tr>\n<tr>\n<td width=\"232\">INR 1,00,000<\/td>\n<td>INR 300 (capped)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Therefore, MDR cannot exceed INR 300 per transaction.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Special_Sectors\"><\/span><span style=\"color: #000080;\"><strong> Special Sectors:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>certain sectors where a flat INR 5 MDR may apply on transactions above INR 2,000: Railways, Telecom, Insurance, Fuel and Certain specified sectors. Example: Insurance premium paid through UPI: INR 1,500 premium \u2192 No MDR and if INR 10,000 premium \u2192 INR 5 MDR to merchant\/service provider.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Capital_Market_Transactions\"><\/span><span style=\"color: #000080;\"><strong> Capital Market Transactions: <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>For mutual funds, stockbrokers, securities, and investment platforms: MDR = 0.02%\u00a0 with a cap of INR 300. Example: Investment through UPI: INR 100,000 mutual fund investment, then MDR = INR 20<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Important_Clarification\"><\/span><span style=\"color: #000080;\"><strong> Important Clarification: <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Customers do NOT pay MDR. The MDR is a merchant-side charge, paid by businesses receiving payments and not to be recovered from customers.\u00a0 Effective Date: Proposed Effective Date: 15 October 2026<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Why_is_it_being_introduced\"><\/span><span style=\"color: #000080;\"><strong> Why is it being introduced?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>UPI transaction volumes have grown enormously.<\/li>\n<li>Infrastructure, fraud monitoring, and cybersecurity costs continue to rise.<\/li>\n<li>A sustainable funding model is needed for long-term expansion of UPI.<\/li>\n<\/ul>\n<div>\n<h2><span class=\"ez-toc-section\" id=\"UPI_%E2%89%A0_New_Charges_for_Everyone_Complete_Explanation\"><\/span><span style=\"color: #000080;\">UPI \u2260 New Charges for Everyone! | Complete Explanation<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-33213\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/\ud835\udc14\ud835\udc0f\ud835\udc08-\u2260-\ud835\udc0d\ud835\udc1e\ud835\udc30-\ud835\udc02\ud835\udc21\ud835\udc1a\ud835\udc2b\ud835\udc20\ud835\udc1e\ud835\udc2c-\ud835\udc1f\ud835\udc28\ud835\udc2b-\ud835\udc04\ud835\udc2f\ud835\udc1e\ud835\udc2b\ud835\udc32\ud835\udc28\ud835\udc27\ud835\udc1e.jpg\" alt=\"\ud835\udc14\ud835\udc0f\ud835\udc08 =\u0338 \ud835\udc0d\ud835\udc1e\ud835\udc30 \ud835\udc02\ud835\udc21\ud835\udc1a\ud835\udc2b\ud835\udc20\ud835\udc1e\ud835\udc2c \ud835\udc1f\ud835\udc28\ud835\udc2b \ud835\udc04\ud835\udc2f\ud835\udc1e\ud835\udc2b\ud835\udc32\ud835\udc28\ud835\udc27\ud835\udc1e!\" width=\"1254\" height=\"1254\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/\ud835\udc14\ud835\udc0f\ud835\udc08-\u2260-\ud835\udc0d\ud835\udc1e\ud835\udc30-\ud835\udc02\ud835\udc21\ud835\udc1a\ud835\udc2b\ud835\udc20\ud835\udc1e\ud835\udc2c-\ud835\udc1f\ud835\udc28\ud835\udc2b-\ud835\udc04\ud835\udc2f\ud835\udc1e\ud835\udc2b\ud835\udc32\ud835\udc28\ud835\udc27\ud835\udc1e.jpg 1254w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/\ud835\udc14\ud835\udc0f\ud835\udc08-\u2260-\ud835\udc0d\ud835\udc1e\ud835\udc30-\ud835\udc02\ud835\udc21\ud835\udc1a\ud835\udc2b\ud835\udc20\ud835\udc1e\ud835\udc2c-\ud835\udc1f\ud835\udc28\ud835\udc2b-\ud835\udc04\ud835\udc2f\ud835\udc1e\ud835\udc2b\ud835\udc32\ud835\udc28\ud835\udc27\ud835\udc1e-300x300.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/\ud835\udc14\ud835\udc0f\ud835\udc08-\u2260-\ud835\udc0d\ud835\udc1e\ud835\udc30-\ud835\udc02\ud835\udc21\ud835\udc1a\ud835\udc2b\ud835\udc20\ud835\udc1e\ud835\udc2c-\ud835\udc1f\ud835\udc28\ud835\udc2b-\ud835\udc04\ud835\udc2f\ud835\udc1e\ud835\udc2b\ud835\udc32\ud835\udc28\ud835\udc27\ud835\udc1e-1024x1024.jpg 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/\ud835\udc14\ud835\udc0f\ud835\udc08-\u2260-\ud835\udc0d\ud835\udc1e\ud835\udc30-\ud835\udc02\ud835\udc21\ud835\udc1a\ud835\udc2b\ud835\udc20\ud835\udc1e\ud835\udc2c-\ud835\udc1f\ud835\udc28\ud835\udc2b-\ud835\udc04\ud835\udc2f\ud835\udc1e\ud835\udc2b\ud835\udc32\ud835\udc28\ud835\udc27\ud835\udc1e-150x150.jpg 150w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/\ud835\udc14\ud835\udc0f\ud835\udc08-\u2260-\ud835\udc0d\ud835\udc1e\ud835\udc30-\ud835\udc02\ud835\udc21\ud835\udc1a\ud835\udc2b\ud835\udc20\ud835\udc1e\ud835\udc2c-\ud835\udc1f\ud835\udc28\ud835\udc2b-\ud835\udc04\ud835\udc2f\ud835\udc1e\ud835\udc2b\ud835\udc32\ud835\udc28\ud835\udc27\ud835\udc1e-768x768.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/\ud835\udc14\ud835\udc0f\ud835\udc08-\u2260-\ud835\udc0d\ud835\udc1e\ud835\udc30-\ud835\udc02\ud835\udc21\ud835\udc1a\ud835\udc2b\ud835\udc20\ud835\udc1e\ud835\udc2c-\ud835\udc1f\ud835\udc28\ud835\udc2b-\ud835\udc04\ud835\udc2f\ud835\udc1e\ud835\udc2b\ud835\udc32\ud835\udc28\ud835\udc27\ud835\udc1e-800x800.jpg 800w\" sizes=\"(max-width: 1254px) 100vw, 1254px\" \/><\/p>\n<ul>\n<li><span style=\"color: #000000;\">Recently, many news headlines and social media posts have created the impression that UPI transactions will become chargeable from 15 October 2026. However, the proposal is being widely misunderstood.\u00a0The most important point is\u00a0UPI remains free for consumers.\u00a0<\/span><\/li>\n<li><span style=\"color: #000000;\">The proposed changes relate to Merchant Discount Rate (MDR) on certain merchant transactions and do not introduce charges for ordinary UPI users.\u00a0If you use PhonePe, Google Pay, Paytm, BHIM, or any other UPI app for personal payments, your experience remains largely unchanged.<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"What_Does_%E2%80%9C96_of_Merchant_Payments_Remain_Unaffected%E2%80%9D_Mean\"><\/span><span style=\"color: #000080;\">What Does &#8220;96% of Merchant Payments Remain Unaffected&#8221; Mean?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>According to the proposal, approximately <strong>96% of merchant UPI transactions will continue without MDR<\/strong>.\u00a0This is because Small merchants remain exempt. Transactions up to \u20b92,000 remain exempt. and Person-to-person transfers remain exempt.\u00a0As a result, most day-to-day UPI payments made by consumers will continue exactly as before.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Remains_Completely_Free\"><\/span><span style=\"color: #000080;\">What Remains Completely Free?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"For_Individual_Users\"><\/span><span style=\"color: #000080;\">For Individual Users<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Sending money to friends<\/li>\n<li>Transferring money to family members<\/li>\n<li>Paying rent to relatives<\/li>\n<li>Bank-to-bank transfers through UPI<\/li>\n<li>QR code scanning<\/li>\n<li>Receiving money<\/li>\n<li>Using UPI apps without any platform fee<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Examples\"><\/span><span style=\"color: #000080;\">Examples<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Sending \u20b950,000 to a friend \u2192 Free<\/li>\n<li>Transferring money between own accounts \u2192 Free<\/li>\n<li>Paying a family member \u2192 Free<\/li>\n<li>Scanning a QR code at a local shop \u2192 Free<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Protection_for_Small_Merchants\"><\/span><span style=\"color: #000080;\">Protection for Small Merchants<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>One of the key features of the proposal is the protection given to small businesses.\u00a0Merchants receiving up to \u20b91 lakh per month through UPI QR payments under the Small Merchant (P2PM) category will continue to enjoy:<\/li>\n<li>Zero MDR : This benefits <span style=\"font-size: 16px;\">Kirana stores, <\/span><span style=\"font-size: 16px;\">Local retailers, <\/span><span style=\"font-size: 16px;\">Street vendors, <\/span><span style=\"font-size: 16px;\">Small service providers and <\/span><span style=\"font-size: 16px;\">Rural businesses.\u00a0<\/span>Therefore, most small merchants will not face any additional burden.\u00a0MDR may apply only to certain larger merchants.<\/li>\n<li>Many people are asking &#8220;Will customers have to pay extra while making UPI payments?&#8221; The answer is NO. Customers do not pay MDR, \u00a0UPI apps cannot charge consumers a platform fee and \u00a0Person-to-person transfers do not attract MDR. MDR is a merchant-side cost. \u00a0It is paid by eligible businesses receiving payments. and The proposal specifically intends that the cost should not be passed on to customers.<\/li>\n<li>The headline &#8220;UPI Charges From October 15&#8221; is incomplete and misleading. A more accurate statement would be UPI remains free for consumers. Small merchants continue to enjoy Zero MDR. Only certain larger merchant transactions above \u20b92,000 may attract MDR, which is payable by the merchant and not by the customer.<\/li>\n<\/ul>\n<\/div>\n<h3><span class=\"ez-toc-section\" id=\"Key_Takeaway_%E2%80%93_Practical_Conclusion\"><\/span><span style=\"color: #000080;\"><strong>Key Takeaway &#8211; Practical Conclusion<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The headline &#8220;UPI Charges from October 15&#8221; can be misleading. The proposal does not mean that UPI users will start paying fees. Instead: Consumers continue to use UPI free of cost, Small merchants remain largely unaffected. Only certain larger merchants may pay a 0.4% MDR on UPI receipts above INR 2,000. The charge is a merchant-side cost, not a customer-side charge.<\/p>\n<p>For the average UPI user, nothing changes. Sending money to friends remains free. Receiving money remains free. Paying small merchants remains free. No charge on QR scanning and No platform fee on UPI apps. Only certain large merchant transactions exceeding INR 2,000 may attract a 0.4% MDR, while small merchants continue to enjoy zero MDR. The infographic&#8217;s overall message is that UPI remains free for consumers, with MDR proposed only as a merchant ecosystem charge for selected categories.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"UPI_MDR_FREE_ERA_ENDS_MONEY_TRAIL_BEGINS\"><\/span><a href=\"https:\/\/carajput.com\/publications\/upi-enters-a-new-era-mdr-framework-2026.pdf\"><span style=\"color: #000080;\"><b>UPI MDR: FREE ERA ENDS | MONEY TRAIL BEGINS<\/b><\/span><\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>From 15 Oct 2026, UPI P2M (Person-to-Merchant) transactions above \u20b92,000 will attract 0.40% MDR, capped at INR 300\/transaction.<\/p>\n<p>INR 10,000 UPI payment = INR 40 MDR<\/p>\n<p>\u2022 Issuer Bank: INR 16 (40%)<br \/>\n\u2022 Acquirer Bank: INR 12 (30%)<br \/>\n\u2022 UPI App: INR 8 (20%)<br \/>\n\u2022 Partner Bank: INR 4 (10%)<\/p>\n<p>Cost comparison: UPI 0.40% | Debit Card up to 0.90% | Credit Card typically 1.5\u20132.5%<\/p>\n<p>Market Intelligence: The bigger shift is UPI monetisation. Banks, acquirers and payment apps now get a direct revenue stream from India\u2019s largest digital-payment rail.<\/p>\n<p>Merchant pays; customer officially doesn\u2019t. Selected categories have separate capped\/special MDR structures.<\/p>\n<p>UPI remains cheaper than cards, but the era of \u201cfree UPI\u201d is entering a new chapter.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-33218\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/Designer-4.png\" alt=\"GST on MDR (Merchant Discount Rate) in UPI Transactions\" width=\"1024\" height=\"1536\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/Designer-4.png 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/Designer-4-200x300.png 200w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/Designer-4-683x1024.png 683w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/Designer-4-768x1152.png 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/09\/Designer-4-800x1200.png 800w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Bottom_Line\"><\/span><span style=\"color: #000080;\">Bottom Line<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>For the average UPI user:<\/p>\n<ul>\n<li>No charge on sending money<\/li>\n<li>No charge on receiving money<\/li>\n<li>No charge on QR scanning<\/li>\n<li>No charge on paying friends or family<\/li>\n<li>No charge on small merchant payments<\/li>\n<\/ul>\n<p>UPI is still free for consumers. The proposed MDR is primarily a merchant ecosystem charge affecting only selected categories of larger merchants.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is UPI MDR (Merchant Discount Rate), and why is it being introduced? What is MDR? Merchant Discount Rate (MDR) is a fee paid by merchants to banks and payment service providers for processing digital payment transactions. The proposed MDR framework aims to support: UPI infrastructure development Cybersecurity enhancements Fraud monitoring systems Merchant onboarding and &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[258],"tags":[10568],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/33207"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=33207"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/33207\/revisions"}],"predecessor-version":[{"id":33211,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/33207\/revisions\/33211"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=33207"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=33207"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=33207"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}