UPI transactions remain completely free for ordinary consumers despite the new rules announced by the National Payments Corporation of India (NPCI) and the Finance Ministry. The updated framework introduces a Merchant Discount Rate (MDR) on high-value business payments, which will come into effect on 15 October

• Standard MDR Fee: A 0.4% charge applies strictly to specified Person-to-Merchant (P2M) transactions above ₹2,000.
• Capped Limit: For large business transactions of ₹75,000 or more, the fee is capped at an absolute maximum of ₹300 per transaction.
• Flat Rate for Utilities: High-value transactions (above ₹2,000) 
  • High-value transactions (above ₹2,000) in thin-margin or essential sectors—such as railways, telecom, fuel, and insurance—will attract a flat rate of ₹5 per transaction.
  • Capital Markets: Payments related to stockbroking and mutual fund investments carry a specialized rate of 0.02% capped at ₹300.
     
  🛒 What Remains Free (Exemptions)
  • Person-to-Person (P2P) Transfers: Sending money to friends, family, or your own accounts continues to be 100% free for any amount.
  • Low-Value Merchant Payments: Any transaction at a business that is ₹2,000 or below is completely exempt from the new fee.
  • Small Merchants Protected: Small business owners or street vendors who receive up to ₹1 lakh per month in total via UPI QR codes will enjoy zero MDR across all transactions.