UPI has become one of the most popular payment methods in India, making it easier to transfer money and pay merchants instantly. From buying vegetables and groceries to making payments at small shops, millions of people use UPI for everyday transactions.
However, many customers and shopkeepers remain unsure whether additional charges apply to UPI payments of up to ₹2,000. According to the information shared in a recent clarification, eligible transactions within this limit do not attract Merchant Discount Rate (MDR) charges. Bank-to-bank UPI transfers also remain free for customers.
What Is MDR in UPI Payments?
MDR stands for Merchant Discount Rate. It refers to the fee charged to merchants for accepting digital payments through certain payment methods.
Under the applicable rules, eligible small merchant transactions of up to ₹2,000 attract zero MDR. This means shopkeepers do not have to pay this merchant fee on qualifying transactions.
The provision is intended to make digital payments more accessible for small businesses while encouraging customers to use UPI for everyday purchases.
Are There Any Charges on RuPay Credit Card UPI Payments?
Customers can also link their RuPay credit cards to UPI and use them to make payments at participating merchants.
For eligible small merchant transactions of up to ₹2,000, the MDR remains zero. As a result, small shopkeepers do not have to bear additional merchant discount charges on these qualifying payments.
This facility allows customers to use linked RuPay credit cards for eligible UPI purchases without creating an additional MDR burden for small merchants.
Do Standard UPI Bank Transfers Have Any Charges?
When customers make a regular UPI payment directly from their bank account to a merchant’s bank account, no transaction fee is charged to the customer.
Similarly, eligible standard UPI payments do not attract MDR charges for small merchants.
This makes direct bank-to-bank UPI payments a convenient option for routine purchases, including grocery shopping, food payments and other everyday transactions.
What Are the Charges for UPI Wallet Payments?
UPI payments made through digital wallets can follow different charging rules compared with direct bank account transfers.
For eligible merchant transactions of up to ₹2,000, MDR remains zero. However, when a payment is made through a Prepaid Payment Instrument (PPI), such as an eligible digital wallet, an interchange fee may apply to merchant transactions exceeding ₹2,000.
The applicable interchange charge depends on the merchant category and the relevant payment regulations.
Therefore, customers should understand the difference between direct bank account UPI payments and wallet-based transactions before making payments.
Disclaimer: This article is intended for general informational purposes only. UPI charges, MDR exemptions and interchange fees are governed by applicable RBI and NPCI rules and may vary depending on the payment method, transaction type and merchant category. Readers and merchants should check the latest official guidelines before making decisions. This website does not provide financial advice or guarantee that every transaction will be free of charges.