UPI merchant charges: who pays the new fee and how much

The merchant. The new rule introduces a merchant discount rate, which by definition is charged to the business accepting the payment. The customer's side of the transaction is unchanged.

You pay ₹10,000 at a covered electronics store. Your bank debits ₹10,000. The store's payment provider receives ₹10,000, deducts ₹40 (0.4%) as MDR, and settles ₹9,960 to the store. The ₹40 is shared between the provider, your bank and the payment app.

Only specified merchant categories, on payments above ₹2,000. A neighbourhood kirana taking ₹300 payments is unaffected. The exact category list comes from NPCI's framework and provider agreements, so merchants should confirm with their payment provider.

0.4% per covered transaction, capped at ₹300. A store doing 100 payments of ₹5,000 each pays ₹2,000 in MDR on ₹5 lakh of sales. Estimate your own volume with the MDR calculator.

Surcharging customers for UPI is generally not permitted under network and government guidance that consumers should not bear UPI charges. Merchants should treat MDR as a cost of doing business, similar to card MDR.

Merchants in specified categories pay 0.4% (max ₹300) on payments above ₹2,000. Everyone else, including every customer, pays nothing extra.