A new rule for UPI payments will introduce a merchant discount rate (MDR) on certain transactions above Rs 2,000. This will come into effect from October 15.
This does not mean that every UPI payment above Rs 2,000 will attract a charge. The charge will depend on the type of payment and how the transaction is made.
Recurring payments such as mutual fund SIPs and OTT subscriptions through UPI AutoPay will be treated differently from one-time payments, and there will be no charges on these payments. The revised MDR framework will cover selected person-to-merchant (P2M) UPI transactions.
MDR is a charge levied within the merchant payment system and is not a new transaction fee that UPI users will have to pay directly.
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For people investing through mutual fund SIPs, the payment method will be important. A SIP collected through UPI AutoPay or an existing UPI mandate will not attract the prescribed MDR.
This means investors with an existing recurring UPI mandate can continue with their scheduled SIP payments without the new MDR being applied to the AutoPay transaction.
One-time payments for mutual funds and other eligible capital-market transactions will have a different rate. These payments will attract an MDR of 0.02%, subject to a maximum of Rs 300 per transaction.
Insurance payments have also been placed in a separate category. For specified insurance payments above Rs 2,000, the MDR will be Rs 5 per transaction instead of the standard 0.4% rate.
This means a person making a Rs 50,000 insurance payment through UPI should not assume that a 0.4% charge, or Rs 200, will automatically be added to the payment.
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OTT subscriptions and utility bills paid automatically through UPI AutoPay will be treated differently from one-time UPI payments. For example, if your OTT subscription or electricity bill is deducted every month through an existing UPI mandate, it is considered a recurring payment.
NPCI’s AutoPay facility supports recurring payments for services such as OTT subscriptions, mobile bills, electricity bills, insurance and mutual funds. Recurring payments made through such mandates are treated differently from fresh merchant payments under the new framework.
For regular eligible P2M transactions above Rs 2,000, the MDR will be 0.4%. For transactions of Rs 75,000 or more, the 0.4% rate will be capped at Rs 300.