UPI MDR 0.4%: Will You Pay More at Checkout?

From October 15, UPI payments may attract a 0.4% merchant fee on transactions in the ₹2,000–₹75,000 range. Small shop owners and gig workers fear this will hurt their already thin margins — and some may pass the cost to you.

Here's what happened: A 0.4% MDR is proposed on UPI transactions in the ₹2,000–₹75,000 range, effective October 15, marking the end of zero-cost UPI for merchants.. Small merchants and gig workers with high UPI transaction volumes in this range stand to lose hundreds to thousands of rupees monthly in payment fees.. UPI MDR was scrapped in January 2020 to boost digital adoption; its return signals a shift as the government seeks to make the payments ecosystem financially self-sustaining..

What you should do: Check your monthly UPI spend — if you frequently pay ₹2,000–₹75,000 to small merchants, watch for surcharges appearing at checkout after October 15.. Small business owners: calculate your monthly UPI volume in the affected range and decide now whether to adjust pricing or explore MDR-exempt transaction structures.. Gig workers receiving UPI payments: ask your clients or platforms whether MDR will be deducted at source or invoiced separately, so you're not blindsided on payouts..

Transactions below ₹2,000 are expected to remain MDR-free — splitting a large UPI payment into smaller amounts may help both you and small merchants avoid the levy legally.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.