Unified Payments Interface (UPI) has become a widely used payment method for everyday purchases, bill payments and other transactions. However, questions often arise about the Merchant Discount Rate (MDR) and whether customers must pay additional charges when making large UPI payments.
MDR is a processing fee associated with certain merchant payment transactions. According to the details provided, specific categories of merchant payments above ₹2,000 may attract a fee. This charge is collected from the merchant rather than directly from the customer, subject to the applicable payment rules.
What Is MDR in UPI Transactions?
MDR stands for Merchant Discount Rate. It refers to a fee associated with processing digital payments accepted by businesses.
When a customer pays a shop or service provider through UPI, the merchant may incur a processing charge if the transaction falls under a category where such a fee applies. The applicable rate can vary depending on the merchant category and transaction amount.
Which UPI Payments May Attract a ₹5 Charge?
According to the information provided, certain merchant transactions exceeding ₹2,000 may carry a flat MDR of ₹5 per transaction.
The categories listed include railway services, telecommunications, insurance premiums, petrol and diesel purchases, agriculture-related payments, education and certain other services.
For eligible transactions in these categories, the reported fee remains ₹5 regardless of the total payment amount. The applicable charges should be confirmed with the payment service provider because rules may differ by transaction type.
UPI Charges for Retail Shops
For general retail businesses and other specified merchant categories, the provided information lists an MDR of 0.4% on eligible UPI transactions above ₹2,000, subject to a maximum charge of ₹300 for transactions of ₹75,000 or more.
The examples below illustrate the calculation described in the supplied information.
| Transaction amount | Reported MDR |
|---|---|
| ₹5,000 | ₹20 |
| ₹10,000 | ₹40 |
| ₹1,00,000 | ₹300 (capped amount) |
These figures reflect the stated rates and are not a confirmation that the same charges currently apply to every merchant or UPI transaction.
Which UPI Transactions Remain Free?
Person-to-person (P2P) UPI payments, such as transferring money directly from one individual’s bank account to another, are described as free of MDR charges in the supplied information.
For example, transferring ₹2,000 to another person would not attract an MDR charge under this arrangement. Customers should distinguish these personal transfers from merchant payments, which may follow different rules.
Disclaimer
This article is intended for general informational purposes only. The MDR rates, transaction thresholds and fee examples are based on the information provided and have not been independently verified. Actual charges depend on the applicable regulations, merchant category and payment service provider. Customers and merchants should check the latest official guidelines issued by the relevant authorities before relying on these figures. No additional fee should be assumed to apply to customers solely because a merchant transaction exceeds ₹2,000.