UPI MDR from Oct 15: RBI Says Impact on Usage Will Be Small

RBI Governor Sanjay Malhotra said the new merchant discount rate (MDR) on select UPI transactions is unlikely to have a major impact on UPI usage. The new framework will come into effect from October 15, introducing a 0.4% charge on eligible UPI person-to-merchant transactions above ₹2,000.

The MDR will be paid by merchants and cannot be passed on to customers. Transactions of ₹75,000 and above will have a maximum MDR of ₹300, while payments up to ₹2,000 will remain free of the new charge. Person-to-person UPI transfers will also continue to remain free.

Malhotra said the RBI does not expect the merchant-side fee to significantly reduce UPI volumes, especially as more than 95% of UPI P2M transactions are below the ₹2,000 threshold. The government has also clarified that customers will continue to pay only the listed price when making UPI payments.

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