Standard Merchant UPI — ₹500
Customer Pays
₹500
MDR
₹0
Merchant Receives
₹500
Zero MDR — ₹500 is well below the ₹2,000 threshold. Effective fee: 0.000%
Calculation Breakdown for ₹500
Under the guidelines established by NPCI and the Ministry of Finance, digital payments made via UPI for retail purchases up to ₹2,000 are completely free of Merchant Discount Rate (MDR) for standard merchants.
Transaction Amount = ₹500
₹500 ≤ ₹2,000 (threshold) → Zero MDR applies
MDR = ₹0.00
GST on MDR = ₹0.00
Net Merchant Settlement = ₹500.00
₹500 ≤ ₹2,000 (threshold) → Zero MDR applies
MDR = ₹0.00
GST on MDR = ₹0.00
Net Merchant Settlement = ₹500.00
Who Bears the Processing Cost?
Since the merchant pays ₹0 and the customer pays ₹0, the operational costs incurred by acquiring banks and issuer banks for processing transactions below ₹2,000 are subsidized through annual budgetary allocations by the Government of India under the promotion of digital payment schemes.
Can a Shop Charge Extra for a ₹500 UPI Payment?
No. Regulators explicitly prohibit merchants from imposing any surcharge or convenience fee on customers who choose to pay via UPI.