00:00Millions of Indians, UPI has seamlessly woven itself into everyday life.
00:05A QR code at a shop, a tap on the phone and the payment is done.
00:10That familiar no-fee UPI story is changing, at least on the merchant side.
00:16From October 15th, a revised Merchant Discount Rate or MDR will kick in
00:21for select UPI payments above Rs. 2000.
00:24You and I will still pay nothing directly.
00:27We will not be paying.
00:30As long as the payment is below Rs. 2000 threshold.
00:34But merchants will have to bear a processing charge on certain transactions,
00:39raising a bigger question.
00:41Will businesses absorb the cost or will it eventually find its way into the prices consumers pay?
00:48UPI may still be free to use, but is the free ride really free?
00:54Here's a report.
01:01UPI payments have been free for consumers for years.
01:06Simple, fast and with no extra charge for the person making the payment.
01:12But it is no longer free.
01:14Why?
01:16Behind every UPI payment is a network of banks, payment apps and service providers and running
01:23that network costs money.
01:26For years, much of that cost has been absorbed by the ecosystem, with government incentives also supporting the system.
01:34Now, from October 15th, a revised MDR framework kicks in for select UPI merchant payments.
01:45There is no charge on the pair, but there is no clarity on whether merchants would pass on their additional
01:55burden to consumers.
01:57So, what changes?
01:59So, what changes?
02:00MDR or merchant discount rate is the processing charge paid by the merchant when a digital payment is accepted.
02:09It does not mean the person making the payment will be charged.
02:15All UPI payments to merchants up to 2,000 rupees will remain MDR free, but for transactions above 2,000
02:23rupees, MDR will now apply in select categories.
02:28In sectors such as railways and fuel, the MDR will be a flat 5 rupee per transaction above 2,000
02:36rupees.
02:36For other high value merchant transactions, the rate will be 0.4%, capped at 300 rupees per transaction.
02:46Simply explained, if you sent 5,000 rupees to a friend, there is no MDR.
02:52But, if you pay a merchant 5,000 for a purchase, the merchant could attract the applicable MDR.
02:59The important distinction is the charge on the merchant side, not the consumer side.
03:05The government says a dedicated fund will also be created to upgrade digital payment infrastructure for small vendors and tier
03:133 markets.
03:16Because UPI has grown at an extraordinary pace.
03:20In 2025-26, it processed more than 24,000 crore transactions worth around 314 lakh crore.
03:28And as volumes grow, so do the cost of cyber security.
03:33Fraud prevention and the infrastructure needed to keep the system running.
03:39Bureau Report, India Today.
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