# Merchants Cannot Pass Upcoming UPI MDR Charges on to Consumers

> Beginning October 15, UPI transactions over 2,000 rupees to merchants will attract a 0.4 percent MDR, but Punjab and Sind Bank's top executive confirms the cost cannot be added to customer bills.

**Type:** article · **Category:** Business · **Published:** 2026-10-06 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/business/bare-upi-bhugatanon-para-lagane-vale-nae-shulka-ko-grahakon-para-nahin-dala-sakenge-vyapari-44050 · **Language:** English
**Tags:** UPI, MDR Charges, Punjab and Sind Bank, Digital Payments, Swarup Kumar Saha, Banking Rules

Clarity has emerged for retail consumers following apprehensions surrounding upcoming changes to digital transactions across the country. Starting October 15, person-to-merchant (P2M) UPI transactions exceeding 2,000 rupees will be subject to a 0.4 percent Merchant Discount Rate (MDR). As consumers grew concerned that store owners might tack this surcharge onto their bills, Punjab and Sind Bank Managing Director and Chief Executive Officer Swarup Kumar Saha clarified that the entire cost rests solely with retailers and cannot be shifted onto buyers.

## Retail Shoppers Will Pay Only Displayed Shelf Prices
Addressing consumer worries, Swarup Kumar Saha stated that business owners accepting payments over UPI are strictly barred from demanding MDR fees from their shoppers. Retail customers will continue to pay only the price displayed on products or services after October 15. The regulatory framework prevents merchants from levying any convenience fee or billing surcharge, guaranteeing that marked retail prices remain unchanged at checkout.

## Maximum MDR Cap Fixed at 300 Rupees Per Transaction
Under the revised guidelines, the 0.4 percent MDR applies exclusively to commercial P2M transactions valued above 2,000 rupees. To keep costs predictable for larger bills, authorities have capped the levy at a maximum of 300 rupees per single transaction. Swarup Kumar Saha said, "Merchants are not allowed to collect MDR charges from customers while accepting payments via UPI." He reiterated that direct person-to-person (P2P) transfers between individuals remain entirely free of charge.

## Over 95 Percent of Everyday Transactions Remain Free
Small-ticket retail payments will face no disruption under the new guidelines, as all UPI transactions up to 2,000 rupees remain completely exempt from MDR. Swarup Kumar Saha pointed out that transactions of 2,000 rupees or below account for more than 95 percent of overall merchant UPI volume in India. A reasonable MDR structure ensures that digital payments stay convenient for daily use while creating long-term operational sustainability for the payment infrastructure.

## Payment Acceptance Treated as Standard Operating Expenditure
The state-run bank chief highlighted that market dynamics and past transaction data show businesses absorb small digital processing expenses as routine overheads. Payment acceptance costs are considered standard operating expenses that merchants comfortably offset through higher customer footfall, increased average order sizes, and substantial reductions in the security risks and handling costs associated with physical cash.

## Flat Cap of 5 Rupees on Railways, Fuel, Telecom and Insurance
Specific consumer categories will benefit from capped fee structures to keep vital services affordable. For transactions exceeding 2,000 rupees involving railway tickets, telecom bill payments, insurance premiums, and fuel purchases at petrol pumps, the MDR is capped at just 5 rupees per transaction. Consumers in these segments will pay only the exact billed dues, with merchants absorbing the minimal processing rate.

## What this means for you
The introduction of UPI MDR rules from October 15 will not lead to any extra financial burden on end consumers.

- **For Everyday Shoppers:** You will not be charged any surcharge or additional fee when paying over 2,000 rupees via UPI at retail stores. Customers are legally obligated to pay only the displayed price of goods and services.
- **For Retail Merchants:** Store owners accepting UPI payments above 2,000 rupees will absorb a 0.4 percent MDR capped at 300 rupees. Businesses cannot legally pass this deduction on to customer bills and must manage it as an operational expense.
- **For Small Daily Purchases:** All merchant payments up to 2,000 rupees as well as all peer-to-peer personal transfers remain entirely free. This ensures over 95 percent of daily digital transactions remain untouched.
- **For Essential Utilities:** High-value transactions for railway bookings, fuel, telecom dues, and insurance premiums face a maximum MDR limit of 5 rupees. Customers will continue paying only their exact billing amount.

## Why this happened
The revised fee structure has been introduced to ensure the long-term operational sustainability of India's digital payment ecosystem.

- **Ensuring Payment System Sustainability:** Introducing a modest MDR on large commercial transactions helps cover infrastructure and banking overheads. This ensures the digital payments backbone remains robust and viable over the long term.
- **Shielding Everyday Transactions:** By exempting payments up to 2,000 rupees, authorities protected micro-merchants and everyday shoppers. Over 95 percent of total merchant UPI transaction volume falls within this exempt limit.
- **Business Logic for Retail Absorption:** Digital checkout reduces cash management hazards and attracts higher retail footfall for store owners. Banking authorities expect merchants to absorb the slight processing cost as routine business overhead.

## Questions & Answers

### 1. Will retail customers have to pay extra charges for UPI transactions after October 15?
No, customers will pay only the marked retail price of goods and services without any extra charges.

### 2. What transaction threshold triggers the new MDR fee?
The 0.4 percent MDR applies only to person-to-merchant (P2M) UPI transactions exceeding 2,000 rupees.

### 3. What is the maximum fee that can be levied on a transaction?
The standard MDR is capped at 300 rupees per transaction, while utility, fuel, railway, and insurance payments are capped at 5 rupees.

### 4. Are personal money transfers between individuals subject to MDR charges?
No, peer-to-peer (P2P) transfers between individuals remain entirely free of charge.

### 5. What is the policy for transactions under 2,000 rupees?
All transactions up to 2,000 rupees remain completely exempt from MDR, covering over 95 percent of overall retail UPI volumes.

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