0.4 pc charges for UPI payments above Rs 2,000; free for consumers

UPI services in India will attract a fractional fee of 0.4 per cent for some transactions above Rs 2,000 from October 15, the National Payments Corporation of India (NPCI) said on Tuesday (September 15), while clarifying that it is free for consumers.

A Merchant Discount Rate (MDR) for transactions of Rs 75,000 and above, it is capped at Rs 300, NPCI said.

“A MDR of 0.4% will be introduced on Person-to-Merchant (P2M) UPI transactions above ₹ 2,000/-. For transactions of ₹75,000/- and above, the MDR will be capped at ₹300 per transaction,” NPCI said in a statement.

Also read: UPI transactions in value terms witness over 4,000-fold jump in 10 yrs

Flat MDR of Rs 5 per transaction will apply to UPI payments above Rs 2,000 in specified merchant categories such as Railways, telecom services, insurance and fuel, NPCI said.

“UPI (Unified Payments Interface) services will continue without any cost to consumers. Consumers can continue to transact free-of-cost using UPI as they have been doing till now. Consumers making payments through UPI will not face any charges. Individual account holders can continue using UPI applications for all routine, daily expenses without worrying about any charges. The MDR policy ensures that UPI remain free and accessible for all citizens across India,” it added.

Explaining the move to impose a fee, NPCI said, "There is no impact on small-value UPI transactions up to ₹ 2,000, which comprise more than 95% of the total volume of UPI (P2M) transactions. The intent of levying reasonable MDR is to ensure that UPI remains, accessible and convenient for everyday transactions while supporting long-term ecosystem sustainability."

Also, NPCI said there is no charge for UPI’s Person-to-Person (P2P) transactions like sending money to friends, family, or personal contacts.

“P2P transactions will continue to be free-of-cost for both payer as well as beneficiary. There will be no charges for any person transferring or receiving any amount to or from any other person (or even self-transfers) using UPI. Whether you are transferring money to a family member, splitting a bill with friends, or performing self-transfers across your own linked bank accounts, zero charges apply. Citizens can freely make transfers on UPI of any permitted amount without incurring any transaction fees,” India’s payments body said.

NPCI also said that UPI apps will not charge a platform fee. "UPI App providers shall NOT charge Platform Fee or any other charge for any payment made through UPI. UPI applications are explicitly restricted from levying platform fees on UPI transactions."