New Delhi: Merchants accepting payments through UPI cannot pass on Merchant Discount Rate (MDR) charges to customers, as retail consumers will have to pay only the price displayed by the merchant even after October 15, Punjab & Sind Bank MD and CEO Swarup Kumar Saha said.

Effective October 15, UPI payments to merchants (P2M) above Rs 2,000 will attract a 0.4 per cent merchant discount rate (MDR) with an overall cap of Rs 300. However, no charge will be levied on person-to-person transactions regardless of the amount.

“Merchants onboarded cannot pass on MDR charges to customers while accepting payments through UPI. The framework ensures consumers pay only the posted price,”

He further said there is no impact on small-value UPI transactions up to Rs 2,000, which comprise more than 95 per cent of the total volume of UPI (P2M) transactions.

The intent of levying reasonable MDR is to ensure that UPI remains accessible and convenient for everyday transactions while supporting long-term ecosystem sustainability, he added.

The MDR policy ensures that UPI remains free and accessible for all citizens across India, he said.

Asked if consumer prices rise at stores if merchants start paying a fee, Saha said market dynamics and historical payment trends show that merchants absorb nominal digital processing costs to drive higher business volume.

“Payment acceptance costs are considered standard operational overheads that are offset by increased footfall, higher average ticket values, and reduced cash-handling risks. Because the proposed UPI MDR is significantly lower than credit card fees and applies only above specific transaction thresholds, shopkeepers have no economic incentive to inflate retail shelf prices,” he said.

Consumers will continue paying the exact listed price for goods and services, he added.

For specific merchant categories such as railways, telecom services, insurance, and fuel, among others, a flat MDR of Rs 5 per transaction would be applicable for transactions above Rs 2,000, Fuel purchases made at petrol stations via UPI qualify for the flat concessional rate of Rs 5 for payments over Rs 2,000.

The flat Rs 5 fee protects petrol pump operators from high processing fees on tank refills. For all fuel payments under Rs 2,000, the MDR remains at zero per cent, ensuring everyday commuter refuelling is completely charge-free, while fuel station operators are not subject to any MDR on such transactions.