The government on Tuesday set a 0.4 per cent charge on UPI payments above Rs 2,000 to merchants and capped the fee at Rs 300 for payments of Rs 75,000 and above as it rolled out a framework for large digital merchant payments.The move ends the zero-MDR regime that has been in place since January 2020, introduced to drive digital payments adoption but long criticised by banks and fintechs as unsustainable.Essential sectors like railways, telecom and fuel get a flat Rs 5 fee per transaction, while capital markets get a lighter 0.02 per cent rate.Small merchants earning up to Rs 1 lakh a month via UPI QR codes stay fully exempt – a carve-out the government says shields 96 per cent of merchant transactions from any new charge, an official statement said.Merchant Discount Rate (MDR) on person-to-merchant (P2M) UPI transactions above Rs 2,000, have been capped at Rs 300 for payments of Rs 75,000 and above.Person-to-person transfers – 37 per cent of UPI’s volume and 70 per cent of its value – remain untouched.App providers are barred from adding platform fees, and banks have been told not to let merchants pass MDR costs to customers. A fifth of the new fee pool will fund small-merchant UPI expansion.