UPI, card, wallet, NEFT and RTGS fees are not interchangeable. A merchant discount rate (MDR) is a charge for accepting a payment; a bank’s NEFT or RTGS fee is a charge for sending a transfer. The payment’s funding source, merchant category, transaction amount, provider agreement and effective date all matter. As of 13 October 2026, the Ministry of Finance’s new UPI MDR framework is scheduled to take effect on 15 October 2026, so its rates are upcoming—not yet in force.
First, separate merchant acceptance fees from transfer fees
MDR is a merchant-side payment-acceptance charge. It may be deducted from a merchant’s settlement or otherwise charged under the merchant’s acquiring arrangement. It is not the same thing as a fee a customer pays their bank to send money.
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That distinction matters when comparing UPI with NEFT or RTGS. A merchant receiving a payment through an acceptance product is dealing with its merchant pricing and settlement terms. A bank customer initiating a transfer is dealing with the tariff for that account, channel and transfer type. A free customer transfer does not establish that every merchant acceptance product is free, and a merchant MDR does not establish that the customer pays a transfer fee.
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What the upcoming UPI MDR framework says
The Department of Financial Services, Ministry of Finance, published its UPI MDR framework and FAQ on 15 September 2026. The stated effective date is 15 October 2026. As of 13 October, the effective date is still in the future. The framework concerns eligible person-to-merchant (P2M) UPI payments and does not make MDR a customer charge. (Department of Financial Services, Ministry of Finance, 15 September 2026.)
Eligible direct bank-account P2M payments
For eligible direct bank-account P2M UPI transactions above ₹2,000, the framework sets MDR at 0.4%. For transactions of ₹75,000 and above, the MDR is capped at ₹300. In specified essential and thin-margin categories, a flat ₹5 MDR applies to transactions above ₹2,000. The category and threshold qualify each rate; it is misleading to describe 0.4% as a fee on every UPI payment.
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The framework also retains zero MDR for qualifying person-to-person-to-merchant (P2PM) small merchants receiving up to ₹1 lakh per month through UPI QR. That treatment depends on the stated merchant category and monthly-receipts threshold, not simply on whether the merchant displays a QR code. A merchant should confirm how its provider classifies its business and receipts.
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What the customer pays
The Ministry’s FAQ says this MDR framework is not a charge on ordinary consumers for making UPI payments. It is a merchant-side rule. That answer should not be stretched into a claim that every payment product connected to UPI is free of every possible charge: credit-linked UPI, wallet products and other provider services may have separate terms.
Compare the payment types on their own terms
| Payment type | Fee treatment supported by the cited sources | What to check |
|---|---|---|
| Direct bank-account P2M UPI | From 15 October 2026, eligible payments above ₹2,000: 0.4% MDR, capped at ₹300 for transactions of ₹75,000 and above; specified categories: flat ₹5 above ₹2,000. Qualifying P2PM small merchants with up to ₹1 lakh in monthly UPI QR receipts remain at zero MDR. | Effective date, merchant classification, payment amount, and whether the payment is direct bank-account UPI. |
| RuPay credit card linked to UPI | Provider- and category-specific MDR may apply. Indian Bank’s 2024 schedule gives examples of 1% and 2.10%, exclusive of GST. | Acquirer’s current schedule, merchant category code (MCC), GST treatment and credit-linked product terms. |
| Debit, credit or prepaid card acceptance | RBI requires acquiring banks to unbundle MDR for different card categories; it does not set one universal current rate in the cited circular. | Card category and the merchant’s acquiring agreement. |
| Wallet or prepaid payment | The cited sources establish no universal current wallet MDR. Prepaid is a separate category in RBI’s unbundling direction. | Whether the product is a wallet or another prepaid instrument, and the provider’s tariff. |
| NEFT or RTGS bank transfer | RBI rules cover specified customer transfer charges, not a merchant-acquiring MDR schedule. | Account type, transfer channel, direction and amount. |
Why card fees vary
“Card MDR” is not one rate that applies to every merchant and instrument. In a circular dated 1 September 2016, the Reserve Bank of India directed acquiring banks to clearly unbundle MDR for different categories of cards, including debit, credit and prepaid cards. The point is transparency between categories—not a single current rate card for every merchant.
The merchant’s agreement and category therefore matter. A quoted rate may apply only to a particular card type, MCC, provider or acceptance channel. Compare the acquiring agreement’s transaction charge alongside any equipment, rental, settlement or service charges. If a provider gives only a blended figure, ask which categories it covers and what other charges are billed separately.
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RuPay credit card on UPI is not ordinary bank-account UPI
A UPI QR can accept a payment funded by a linked RuPay credit card. That does not make the transaction identical to a direct bank-account UPI payment: it uses credit funding and can have its own merchant-pricing treatment. The Ministry FAQ distinguishes credit cards linked to UPI or credit lines from ordinary bank-account UPI, while RBI’s card-category direction underscores that card acceptance has category-specific pricing.
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Indian Bank’s circular effective 20 May 2024 illustrates how specific such schedules can be. It lists 1% MDR for specified industry-program MCCs and 2.10% for other listed MCCs for RuPay credit-card payments through its UPI QR. Those figures are exclusive of GST. The same circular states that qualifying small offline static-QR payments up to ₹2,000 have no MDR. These are examples from one bank’s schedule—not a market-wide credit-card-on-UPI rate or a substitute for checking a current contract.
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Wallet and prepaid payments need provider-level checking
A wallet-funded payment is not automatically covered by the direct bank-account UPI MDR treatment. RBI’s 2016 unbundling direction identifies prepaid as a distinct card category, but the sources do not establish one current universal wallet merchant rate. The product label, funding source and acceptance provider need to be checked rather than inferred from the QR or app used to pay.
India Post Payments Bank’s published merchant MDR schedule lists 0% UPI MDR for both of its listed merchant-turnover categories. That is a provider-specific schedule; it cannot be assumed to describe another bank’s wallet or prepaid pricing, or another provider’s UPI terms. Check the schedule that applies to the merchant’s own account and product.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.NEFT and RTGS fees are bank-transfer tariffs
NEFT and RTGS are bank-transfer systems. RBI’s customer-charge rules do not turn them into merchant acceptance products or define merchant MDR. The distinction is especially important when a business compares “accepting payments” with “receiving a bank transfer”: the former may involve an acquirer or payment provider, while the latter depends on the sending and receiving banks’ transfer tariff and account terms.
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- Online NEFT initiated by savings-account holders must be free under the RBI rule. This is specific to savings-account holders using the online channel; it is not a statement that all NEFT transfers from all account types or channels are free.
- Inward RTGS is free under the cited RBI guidance.
- For outward RTGS, the specified maximum charge is ₹25 for transfers from ₹2 lakh to ₹5 lakh and ₹50 for transfers above ₹5 lakh, excluding applicable tax. These are ceilings for the covered customer charges, not a merchant MDR.
Business-account pricing and provider-specific services need separate checking. A business should not assume the savings-account NEFT rule or the customer RTGS ceilings settle every charge associated with its accounts, payment collection or settlement arrangements.
How to compare the actual cost for a business
Compare the full arrangement rather than selecting a payment method by one headline percentage. The relevant cost can depend on a combination of the per-transaction MDR, amount thresholds, merchant category, taxes, equipment and service terms, and when settlement reaches the account.
Quick Recap
- Identify the funding source and rail. Establish whether customers pay from a bank account, linked RuPay credit card, wallet or other prepaid product, or by NEFT/RTGS transfer. Do not classify all QR payments as the same product.
- Confirm the merchant classification. Ask the provider which merchant category or MCC it uses and whether the business qualifies for a category-specific rate or P2PM small-merchant treatment. For the upcoming UPI framework, confirm whether the business meets the relevant classification and monthly-receipts condition.
- Apply the amount rule to each payment type. For the new direct-account P2M UPI framework, note the threshold above ₹2,000, the ₹300 cap for transactions of ₹75,000 and above, and the specified-category flat ₹5 rate. Check whether the provider’s other product schedules have their own thresholds or qualifications.
- Ask for card categories separately. Request the rates and terms for debit, credit and prepaid cards rather than relying on a blended card figure. For a RuPay credit card linked to UPI, ask for the applicable MCC schedule and confirm whether quoted figures include GST.
- Separate the transaction charge from other costs. For card acceptance, identify device purchase or rental, service and settlement charges in addition to MDR. A POS terminal is acceptance infrastructure; purchasing one does not itself remove MDR or determine the acquiring rate.
- Check transfer account and channel rules. If customers pay by NEFT or RTGS, establish which party initiates the transfer, which account type and channel are used, and which tariff applies. Do not substitute a savings-account customer rule for a business-account price.
- Verify timing and written terms. The new Ministry UPI framework is scheduled for 15 October 2026. Confirm the provider’s implementation, effective schedule and settlement terms in writing, especially for any contract or quote issued before that date.
Questions to put to a payment provider
- Which payment funding sources and card categories does the quoted rate cover?
- What merchant category or MCC is assigned, and can a different category change pricing?
- Are percentage rates, flat charges and caps applied before or after tax? Which figures are exclusive of GST?
- Are there device, rental, gateway, service, settlement or other charges beyond MDR?
- When are funds settled, and do settlement terms differ by payment type?
- For UPI QR payments, how does the provider distinguish direct bank-account payments from credit-card-linked or prepaid-funded payments?
- What date does the applicable schedule take effect, and where are the terms recorded in the merchant agreement?
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