UPI Payments: How Your Fuel and Other Purchases Will Be Impacted by New MDR Charges
UPI will continue to remain free for consumers, even as Merchant Discount Rate (MDR) is introduced on select merchant transactions above ₹2,000.
This means customers paying through UPI will not have to pay any additional charge, whether they are buying fuel, shopping at a store or paying utility bills.
The MDR will be paid by merchants accepting eligible UPI payments. Merchants cannot pass this charge on to customers.
For regular merchant transactions, there will be no MDR for payments up to ₹2,000. For eligible transactions above ₹2,000, merchants will pay an MDR of 0.4%. The charge will be capped at ₹300 for transactions of ₹75,000 and above.
Small merchants such as street vendors, neighbourhood shops and small businesses receiving up to ₹1 lakh per month through UPI QR codes in their bank accounts will continue to have zero MDR.
What happens when you pay for fuel through UPI?
Fuel purchases have been given a concessional MDR structure.
If your fuel bill is ₹2,000 or less, there will be no MDR. For any fuel purchase above ₹2,000, the petrol pump operator will pay a flat ₹5 MDR.
The amount does not increase with the size of the fuel bill. A UPI payment of ₹2,500, ₹5,000 or ₹10,000 will attract the same ₹5 MDR for the petrol pump.
The customer, however, will pay only for the fuel purchased. The ₹5 charge cannot be added to the customer’s bill.
What about electricity, insurance, railways and other payments?
The flat ₹5 MDR for transactions above ₹2,000 will also apply to several essential services, including education, insurance, railways, telecom and utilities such as electricity, water and piped natural gas, among others.
Payments up to ₹2,000 in these categories will have zero MDR.
The concessional ₹5 charge for these services is lower than the charges usually applicable to credit cards, debit cards and wallets.
For consumers, therefore, using UPI itself remains free. Sending money to family and friends continues to be free, and there is no UPI charge for paying merchants, irrespective of the amount.
