The new Unified Payments Interface (UPI) framework introduced has no impact on any person to person transactions. UPI will continue to remain completely free for all person-to-person transactions, irrespective of the amount transferred. Payments to merchants up to Rupees 2,000, along with transactions covered under the zero-Merchant Discount Rate or MDR framework for small merchants, will also remain free.Consequently, approximately 96% of all P2M transactions will remain unaffected. MDR will apply only to specified merchant transactions above Rupees 2,000.
It is clarified that MDR is neither a tax nor a charge collected by the Government or NPCI. It is distributed among payment ecosystem participants, including banks and payment application providers, to support the operation and continued expansion of the UPI ecosystem.
According to the circular for person-to-person transactions, there will be no charges at all, irrespective of transaction value. P2P transactions constitute 37 percent of the total UPI transaction in volume terms and 70 percent in value terms. It further says that charges will apply only to person-to-merchant transactions exceeding Rupees 2,000.
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