UPI Continues to Remain Free for Peer to Peer Transactions and 96% of Merchant Transactions

The Ministry of Finance announced a new UPI framework under the Payment and Settlement Systems Act, 2007, aimed at ensuring the long-term sustainability of the digital payments ecosystem while maintaining free transactions for individuals and small merchants. All person-to-person (P2P) transactions, person-to-merchant (P2M) transactions up to ₹2,000, and payments received by small merchants (including street vendors) receiving up to ₹1 lakh per month will remain completely free from Merchant Discount Rate (MDR). MDR will apply only to specified merchant transactions above ₹2,000, essential sectors, and capital markets, and customers are not required to bear this charge.