UPI transaction charges from October 15: Which payments will attract MDR and which stay free?

The government has introduced a 0.4 per cent transaction fee on UPI payments above Rs 2,000 made to merchants.

The new charge will come into effect from October 15, ending six years of free UPI transactions. The fee will be capped at Rs 300 for payments of Rs 75,000 and above.

However, person-to-person transfers will remain free. According to the Finance Ministry, more than 95 per cent of person-to-merchant UPI transactions are also below Rs 2,000 and will continue to be exempt.

Essential sectors such as railways, telecom, insurance, fuel and agricultural inputs will attract a flat Rs 5 fee for transactions above Rs 2,000. The same applies to select utility bills and educational fee payments.

Payments involving mutual funds, securities, stockbrokers and dealers will attract a lower 0.02 per cent fee, capped at Rs 300.

UPI apps cannot impose additional platform or hidden charges. Banks have also been directed to ensure merchants do not pass the fee on to customers.