- Transactions up to ₹2,000: 0.00% Zero MDR across all standard merchant categories.
- Standard Transactions above ₹2,000: 0.40% (40 basis points), strictly capped at ₹300 per transaction.
- Essential / Utility Sectors: Flat ₹5 per transaction above ₹2,000.
- Capital Markets / Mutual Funds: 0.02% (2 bps), capped at ₹300 per transaction.
- P2P (Peer-to-Peer): Always 0% free.
- PPI Wallets on UPI QR: 0.5% – 1.1% interchange on transactions above ₹2,000.
- RuPay Credit Card on UPI: 0% up to ₹2,000; up to 2.0% for transactions above ₹2,000.
1. Master UPI MDR Rate Card by Category
The table below summarizes the official MDR rates, thresholds, caps, and applicable GST treatment across all merchant classifications recognized in the Indian digital payments ecosystem:
| Category | Threshold (≤ ₹2,000) | Rate (> ₹2,000) | Maximum Cap | 18% GST Status |
|---|---|---|---|---|
| Standard Merchant E-commerce, retail, services, hospitality |
0% Zero MDR | 0.40% (40 bps) | ₹300.00 | Applicable on MDR |
| Essential Sectors Electricity, gas, water, fuel, railways, education |
0% Zero MDR | Flat ₹5.00 | ₹5.00 | Applicable on MDR |
| Capital Markets Mutual funds, stock broking, insurance, pensions |
0% Zero MDR | 0.02% (2 bps) | ₹300.00 | Applicable on MDR |
| Small Offline Merchants Kirana, street vendors, annual turnover < ₹20L |
0% Zero MDR | 0% Zero MDR | None (Free) | Not applicable |
| Person-to-Person (P2P) Family, friends, peer transfers |
0% Free | 0% Free | None (Free) | Not applicable |
2. Prepaid Payment Instruments (PPI) on UPI Rates
In April 2023, the National Payments Corporation of India (NPCI) introduced an interchange fee framework for transactions made using Prepaid Payment Instruments (wallets such as Paytm Wallet, PhonePe Wallet, Amazon Pay Wallet, Mobikwik, or Sodexo cards) to scan merchant UPI QR codes:
| Merchant Sector / MCC | Transaction ≤ ₹2,000 | Interchange Rate (> ₹2,000) | Interchange Cap |
|---|---|---|---|
| Fuel Stations (MCC 5541, 5542) | 0.00% | 0.50% | ₹15.00 |
| Telecom & Utilities (MCC 4814, 4900) | 0.00% | 0.70% | ₹15.00 |
| Post Office & Government (MCC 9402, 9399) | 0.00% | 0.70% | ₹15.00 |
| Supermarkets & Groceries (MCC 5411) | 0.00% | 0.90% | ₹50.00 |
| Standard Retail / Dining / Travel | 0.00% | 1.10% | No cap / Aggregator tariff |
Crucial note: PPI interchange is paid by the wallet issuer and acquiring aggregator. Standard bank-to-bank UPI (using savings/current bank account via UPI PIN) does NOT incur PPI interchange fees.
3. RuPay Credit Card on UPI Rates
The Reserve Bank of India permitted linking RuPay credit cards directly to the UPI ecosystem. The rate dynamics for credit card transactions on UPI are governed by the following rules:
- Small Merchants (Turnover ≤ ₹20 Lakh): Fully exempt from MDR on RuPay Credit Card transactions up to ₹2,000.
- Standard Merchants (Transactions > ₹2,000): MDR of up to 2.00% applies. This 2% is typically split into:
- Issuer Bank Interchange: ~1.40%
- Acquiring Bank / Aggregator: ~0.45%
- NPCI Switch Fee: ~0.15%
4. Payment Mode Fee Comparison: UPI vs Cards vs Net Banking
Compare how UPI MDR compares against other popular Indian payment methods for merchants:
| Payment Instrument | MDR Range (≤ ₹2,000) | MDR Range (> ₹2,000) | Settlement Timeline |
|---|---|---|---|
| UPI (Bank Account P2M) | 0.00% | 0.40% (capped at ₹300) | T+1 (or Instant T+0) |
| PPI Wallet on UPI | 0.00% | 0.50% – 1.10% | T+1 |
| RuPay Credit Card on UPI | 0.00% | Up to 2.00% | T+1 to T+2 |
| RuPay Debit Card | 0.00% | 0.00% (Zero MDR mandated) | T+1 |
| Visa / Mastercard Debit Card | 0.40% – 0.90% | 0.90% (capped at ₹1,000) | T+1 to T+2 |
| Visa / Mastercard Credit Card | 1.50% – 2.00% | 1.80% – 2.50% (No cap) | T+2 to T+3 |
| Net Banking | Flat ₹10 – ₹20 | Flat ₹15 – ₹25 or 1.50% | T+1 to T+2 |
5. How the MDR Fee is Split (The Interchange Waterfall)
When an MDR charge is levied, it is not kept entirely by the payment gateway or bank. Instead, it is distributed across four critical infrastructure participants:
Total MDR = Issuer Bank Interchange (60-70%) + Acquiring Bank Fee (20-25%) + Payment Aggregator Fee (5-10%) + NPCI Network Switch (3-5%)
- Issuer Bank: The bank holding the customer's savings/credit account. Receives the largest share (interchange) to cover fraud risk, customer servicing, and infrastructure costs.
- Acquiring Bank: The bank holding the merchant's escrow/settlement current account.
- Payment Aggregator (PA/PG): Companies like Razorpay, Cashfree, Paytm, PhonePe, or Pine Labs that provide the API integration, dashboards, webhooks, and merchant support.
- NPCI (National Payments Corporation of India): Operates the unified switch and charges a nominal switching fee per transaction.
6. How to Calculate Your Effective Rates
To verify the exact deduction for any transaction size under these rules, use our free interactive calculators: