Payment or merchant category<\/strong><\/td>Treatment under the new framework<\/strong><\/td><\/tr>P2P transfers<\/strong><\/td>No charge to sender or recipient<\/td><\/tr> P2M payments up to Rs 2,000<\/strong><\/td>Zero MDR<\/td><\/tr> Eligible standard P2M payments above Rs 2,000<\/strong><\/td>0.4%, capped at Rs 300 per payment<\/td><\/tr> Qualifying P2PM small merchants<\/strong><\/td>Zero MDR; up to Rs 1 lakh monthly UPI QR receipts<\/td><\/tr> Specified sectors such as fuel and insurance<\/strong><\/td>Flat Rs 5 for eligible payments above Rs 2,000<\/td><\/tr> Capital-market payments<\/strong><\/td>0.02%, capped at Rs 300; category rules apply<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\nThe table describes merchant charges. A customer does not pay an extra 0.4% simply because a purchase exceeds Rs 2,000. Special categories must be identified before applying the standard rate.<\/p>\n\n\n\n
<\/span>What MDR means in UPI payments<\/span><\/h1>\n\n\n\nMDR stands for Merchant Discount Rate: the processing fee associated with accepting a payment. It is a cost within the merchant payment ecosystem and supports the participants that process and enable the transaction. It is not a discount offered to the shopper.<\/p>\n\n\n\n
For example, a standard-category Rs 10,000 payment generates Rs 40 in MDR. The buyer pays the Rs 10,000 purchase price; the merchant accounts for the processing cost.<\/p>\n\n\n\n
<\/span>How to calculate UPI MDR charges<\/span><\/h1>\n\n\n\nFor an eligible standard-category payment above Rs 2,000, multiply the full transaction value by 0.004 and apply the Rs 300 ceiling. The Rs 2,000 threshold determines whether this rate applies; it is not an amount deducted before calculating the fee.<\/p>\n\n\n\n
Standard MDR = the lower of transaction value \u00d7 0.004 and Rs 300.<\/p>\n\n\n\nPayment value<\/strong><\/td>Calculation<\/strong><\/td>Merchant MDR<\/strong><\/td><\/tr>Rs 2,000<\/strong><\/td>Within the zero-MDR threshold<\/td> Rs 0<\/td><\/tr> Rs 3,000<\/strong><\/td>3,000 \u00d7 0.004<\/td> Rs 12<\/td><\/tr> Rs 10,000<\/strong><\/td>10,000 \u00d7 0.004<\/td> Rs 40<\/td><\/tr> Rs 25,000<\/strong><\/td>25,000 \u00d7 0.004<\/td> Rs 100<\/td><\/tr> Rs 50,000<\/strong><\/td>50,000 \u00d7 0.004<\/td> Rs 200<\/td><\/tr> Rs 75,000<\/strong>+<\/td>75,000 \u00d7 0.004<\/td> Rs 300<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\nThese examples isolate MDR. They are not an all-inclusive provider invoice or a statement about applicable taxes, subscriptions or separately contracted services. They also do not apply to exempt merchants or special-rate categories.<\/p>\n\n\n\n
<\/span>Who qualifies for zero MDR<\/span><\/h1>\n\n\n\n<\/span>Personal transfers and low-value merchant payments<\/span><\/h2>\n\n\n\nP2P means person-to-person, such as transferring money to a family member. P2M means person-to-merchant, such as paying a retailer. P2P transfers remain free, and merchant payments of Rs 2,000 or less remain outside the new MDR charge. Transaction limits imposed for security are different from fee thresholds.<\/p>\n\n\n\n
<\/span>Small merchants under P2PM<\/span><\/h2>\n\n\n\nP2PM is a specialised small-merchant category. Qualifying vendors receiving up to Rs 1 lakh per month through UPI QR retain zero MDR. A single receipt above Rs 2,000 does not automatically remove this protection: the merchant\u2019s classification matters.<\/p>\n\n\n\n
The official FAQ says banks monitor inward receipts and transition P2PM merchants to P2M after receipts exceed Rs 1 lakh per month for three consecutive months. Ask your acquiring bank to confirm your recorded category and how any change will be communicated.<\/p>\n\n\n\n
<\/span>Special rates and payment types<\/span><\/h1>\n\n\n\n<\/span>Flat Rs 5 MDR for specified sectors<\/span><\/h2>\n\n\n\nEligible payments above Rs 2,000 in specified categories, including railways, telecom, insurance, fuel, utilities (electricity and water) and agricultural inputs, attract a flat Rs 5 MDR. Businesses should confirm their merchant category with the acquiring bank before using a concessional rate.<\/p>\n\n\n\n
For illustration, an eligible Rs 10,000 insurance payment would produce Rs 5 in merchant MDR, compared with Rs 40 for a standard-category retail purchase of the same amount. The rate follows the payment category.<\/p>\n\n\n\n
<\/span>Capital markets<\/span><\/h2>\n\n\n\nThe framework specifies 0.02% MDR for capital-market payments, including mutual funds, securities, stockbrokers and dealers, with a Rs 300 cap. An eligible Rs 50,000 payment therefore produces Rs 10 in MDR. Check the transaction\u2019s classification and applicable exemption before using this rate.<\/p>\n\n\n\n
<\/span>Education fee payments<\/span><\/h2>\n\n\n\nSchool tuition, university term fees and entrance-examination payments fall under their own designated industry category rather than the standard rate or the flat Rs 5 rate. Eligible payments above Rs 2,000 get flat-fee or capped-rate treatment, so a large fee payment is not charged the full 0.4%. Educational institutions should confirm the exact rate with their acquiring bank rather than assume the standard-category figure.<\/p>\n\n\n\n
<\/span>UPI AutoPay and credit-linked UPI<\/span><\/h2>\n\n\n\nThe FAQ says automated recurring UPI Mandates or AutoPay carry no prescribed transaction MDR. RuPay credit cards on UPI and pre-sanctioned credit lines follow separate credit-product rules. The new bank-account payment rate should not be applied to those products by default.<\/p>\n\n\n\n