The Finance Ministry has clarified that UPI will remain free for all person-to-person transactions regardless of amount. Merchant payments up to ₹2,000 will also remain free, along with transactions covered by the zero-MDR framework for small merchants.
The ministry says this means about 96% of person-to-merchant UPI transactions will remain unaffected. Merchant Discount Rate will apply only to specified large-value merchant transactions above ₹2,000.
The distinction matters because MDR is not a government tax. It is a payment-system fee distributed among banks and payment providers to support the network. The policy is therefore trying to balance universal low-cost access with the long-term economics of running the UPI ecosystem.
