The government has introduced a 0.4 per cent fee on UPI payments of more than Rs 2,000 made to merchants from October 15.Highlights of Merchant Discount Rate (MDR) on UPI transactions*No Merchant Discount Rate (MDR) to be levied on UPI transactions up to Rs 2,000*MDR of 0.4% to be levied on Person to Merchant transactions above Rs 2,000*On a Rs 3,000 purchase, 0.4 % rate works out to a Rs 12 fee paid by merchant to its acquiring bank*Commission to be shared amongst the payment ecosystem partners including banks*No charges on person-to-person (P2P) transactions, irrespective of transaction value*MDR capped at Rs 300 per transaction on high-value payments of Rs 75,000 and above*Essential sectors like telecom, insurance, fuel sectors to pay a flat MDR of Rs 5 per transaction*Payments towards mutual funds, and stock brokers to attract MDR of 0.02%, capped at Rs 300*Small merchants receiving up to Rs 1 lakh per month to enjoy mandatory zero MDR for all transactions*UPI app providers prohibited from levying platform fees or hidden charges*Banks advised to ensure that merchants do not pass MDR charges to customers for UPI payments*No monthly quotas, volume limits, or tiered caps on free UPI transactions for persons*Daily transaction limits enforced by banks, NPCI at Rs 1lakh-5 lakh depending on category*Dedicated fund for promoting use of UPI by small merchants to be set up with contribution of 5% of total MDR collections*Only 4 percentage of merchant transactions to be impacted by the MDR introduction*Finalised MDR framework and threshold structure take effect from October 15