UPI Fees Alert! New Charges on Transactions Over ₹2,000 from Oct 15!
UPI Fees Alert! New Charges on Transactions Over ₹2,000 from Oct 15!
Brace for changes! UPI transactions above ₹2,000 will now incur a 0.4% MDR for merchants. Learn how these new charges affect your digital payments and investments.
Get ready for some significant changes in how you use UPI for higher-value transactions! From October 15, a new Merchant Discount Rate (MDR) framework will kick in, impacting payments over ₹2,000. This move by the Ministry of Finance aims to streamline and support the digital payments ecosystem, particularly for retail participation in financial markets.
Under the new rules, all Peer-to-Merchant (P2M) UPI transactions exceeding ₹2,000 will be subject to a 0.4% MDR. This means that when you pay a merchant using UPI for an amount greater than ₹2,000, the merchant will incur this charge. However, there's a cap in place: for transactions of ₹75,000 and above, the MDR charge will be capped at ₹300 per transaction, offering some relief for very large payments.
Good news for everyday small transactions: payments below ₹2,000 will continue to remain completely free.
This ensures that the majority of daily small-value UPI transactions, which form the backbone of its widespread adoption, are unaffected. Additionally, small merchants in specified exempted categories will not be charged the MDR merely for receiving payments above the threshold, providing support to micro-businesses.
Another important detail for investors: payments made through UPI for capital market instruments will see a significantly lower MDR. These transactions will be charged a mere 0.02%. This lower rate is specifically designed to encourage and support continued retail participation in formal financial markets, making it more cost-effective for individuals to invest using UPI.
The introduction of these charges marks a shift in the UPI landscape, which has largely been free for both users and merchants. While small transactions remain free, businesses handling larger UPI payments will now need to factor in these new costs.
Consumers might see some merchants adjusting their payment preferences or pricing to accommodate these changes.
It's a development that will undoubtedly shape the future of digital payments in the country.
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