Government sources have clarified that the 0.4% Merchant Discount Rate (MDR)—applicable from October 15 to UPI transactions exceeding ₹2,000—will not be charged to customers and will not affect the common man. Officials also stated that person-to-person transactions will remain completely free of charge.

This fee is not paid to the government but is shared among banks and other entities within the payment ecosystem. Of this amount, 40% goes to the customer's bank, 30% to the payment gateway, 20% to the UPI app, and the remaining 10% to the sponsoring bank.

Small merchants with monthly transaction volumes of up to ₹1 lakh are fully exempt from this charge. Additionally, the government announced that awareness campaigns, led by the Indian Banks' Association (IBA), will be conducted to clear up any misconceptions regarding this new system.