UPI Still Free for Consumers: What Changes and What Does Not

Consumers using UPI can continue to make payments without paying any fee. The introduction of MDR on select UPI merchant transactions does not mean consumers will be charged for using UPI.

Sending money to family and friends through UPI remains completely free. Consumers can also continue to pay any merchant through UPI, for any amount, without a charge.

This applies whether the payment is made at a retail store, local market or through a QR code displayed by a street vendor. Merchants cannot pass MDR on to customers.

The changes primarily concern merchants accepting UPI payments. There will be zero MDR on UPI merchant payments up to ₹2,000, meaning 96% of merchant transactions will remain free.

Small merchants—including street vendors, neighbourhood shops and small businesses—that receive up to ₹1 lakh per month through UPI QR codes in their bank accounts will continue to enjoy zero MDR.

For eligible merchant transactions above ₹2,000, the MDR will be 0.4%. For transactions of ₹75,000 and above, the MDR will be capped at ₹300 per transaction.

There are also special rates for essential services. Transactions below ₹2,000 remain subject to zero MDR, while payments above ₹2,000 towards fuel, education, insurance, railways, telecom and utility services such as electricity, water and piped natural gas, among others, will attract a flat ₹5 MDR per transaction.