{"id":25839,"date":"2026-02-09T11:15:09","date_gmt":"2026-02-09T05:45:09","guid":{"rendered":"https:\/\/blog.razorpay.in\/blog\/?p=25839"},"modified":"2026-02-09T11:18:40","modified_gmt":"2026-02-09T05:48:40","slug":"upi-charges-explained-mdr-vs-platform-fees","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/upi-charges-explained-mdr-vs-platform-fees\/","title":{"rendered":"UPI Charges Explained in Payment Gateway: MDR vs. Platform Fees"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The prevailing narrative suggests that UPI is a free service. For consumers and peer-to-peer transfers, this is largely true. However, for merchants, the settlement report often tells a different story. If you\u2019ve wondered why a &#8220;Zero MDR&#8221; government initiative still results in fees on your payment gateway (PG) dashboard, you are likely misunderstanding two distinct costs.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To manage your business finances effectively, it is essential to distinguish between <\/span><b>MDR (Merchant Discount Rate)<\/b><span style=\"font-weight: 400;\"> and <\/span><b>Platform Fees<\/b><span style=\"font-weight: 400;\">. These represent two different charges for two entirely different services.<\/span><\/p>\n<div style=\"border-left: 4px solid #0073aa; background: #f0f8ff; padding: 15px; margin: 20px 0; border-radius: 5px;\">\n<p><strong style=\"color: #0073aa; font-size: 18px;\">Key Takeaways<\/strong><\/p>\n<ul style=\"margin-top: 10px; padding-left: 20px;\">\n<li>There is often confusion among merchants: if UPI has Zero MDR, why do payment gateways still charge a fee? Some also assume that Razorpay charges for UPI, while other payment gateways are \u201cfree.\u201d<\/li>\n<li>The reality is that all payment gateways incur costs to run UPI payments at scale, and no provider can offer business-grade infrastructure without charging in some form.<\/li>\n<li>Zero MDR applies to the UPI network, not to the payment gateway layer.<\/li>\n<li>MDR is the charge paid to banks and NPCI for moving money through the UPI system. For standard UPI bank account payments, this is 0% by government mandate.<\/li>\n<li>Platform fees are charged by payment gateways like Razorpay for providing the technology that enables reliable UPI payments, including high success rates, fraud protection, smart routing, dashboards, and automated reconciliation.<\/li>\n<li><span style=\"font-weight: 400;\">So even when MDR is zero, merchants may still pay a platform fee because they are paying for the <\/span><b>infrastructure and reliability of the payment gateway<\/b><span style=\"font-weight: 400;\">, not for the UPI transfer itself<\/span>.<\/li>\n<li>In short, MDR moves the money, while platform fees ensure the payment is received and managed successfully.<\/li>\n<\/ul>\n<\/div>\n<h2><b>Breaking Down the Difference: MDR vs. Platform Fee<\/b><\/h2>\n<h3><b>What is MDR?<\/b><\/h3>\n<p><a href=\"https:\/\/razorpay.com\/blog\/merchant-discount-rate-mdr\/\"><span style=\"font-weight: 400;\">MDR<\/span><\/a><span style=\"font-weight: 400;\"> is the network-level charge paid to the participating banks and the <\/span><a href=\"https:\/\/www.npci.org.in\/\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">National Payments Corporation of India (NPCI)<\/span><\/a><span style=\"font-weight: 400;\"> to facilitate the actual movement of funds through the banking ecosystem.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>UPI (Bank Account):<\/b><span style=\"font-weight: 400;\"> For standard savings account transfers, the Government of India mandates a <\/span><b>0% MDR<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>UPI (RuPay Credit Card):<\/b><span style=\"font-weight: 400;\"> Because this involves a credit risk and a 45-day interest-free period for the user, a standard MDR applies (typically between <\/span><b>1.1% to 2%<\/b><span style=\"font-weight: 400;\">).<\/span><\/li>\n<\/ul>\n<h3><b>What is a Platform Fee?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">A Platform Fee is the fee you pay to a payment gateway provider like <\/span><a href=\"https:\/\/razorpay.com\/\"><span style=\"font-weight: 400;\">Razorpay<\/span><\/a><span style=\"font-weight: 400;\"> to manage the transaction lifecycle. While the money moves via UPI, Razorpay provides the infrastructure to ensure that the move is successful, secure, and recorded. This covers:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>High Success Rates:<\/b><span style=\"font-weight: 400;\"> Utilizing dynamic switching to route transactions through the most stable bank servers.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Fraud Detection:<\/b><span style=\"font-weight: 400;\"> Real-time security monitoring to prevent chargebacks and unauthorized access.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Automated Reconciliation:<\/b><span style=\"font-weight: 400;\"> Instantly matching payments to order IDs so you don&#8217;t have to check bank statements manually.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Optimized UI\/UX:<\/b><span style=\"font-weight: 400;\"> Features like &#8220;<\/span><a href=\"https:\/\/razorpay.com\/docs\/payments\/payment-methods\/upi\/upi-intent\/\"><span style=\"font-weight: 400;\">UPI Intent<\/span><\/a><span style=\"font-weight: 400;\">&#8221; that reduce customer drop-offs.<\/span><\/li>\n<\/ul>\n<table>\n<tbody>\n<tr>\n<td>\n<h4><b>Feature<\/b><\/h4>\n<\/td>\n<td>\n<h4><b>MDR<\/b><\/h4>\n<\/td>\n<td>\n<h4><b>Platform Fee\u00a0<\/b><\/h4>\n<\/td>\n<\/tr>\n<tr>\n<td><b>What is it?<\/b><\/td>\n<td><span style=\"font-weight: 400;\">A charge paid to banks\/NPCI for using their network.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">A fee for technology, security, and success-rate optimization.<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Who receives it?<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Banks and NPCI<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Payment Gateway<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>UPI (Bank Account)<\/b><\/td>\n<td><span style=\"font-weight: 400;\">0% (Standardized by Govt)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Standard Platform Fee<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>UPI (RuPay CC)<\/b><\/td>\n<td><span style=\"font-weight: 400;\">~1.1% to 2% (Market Rate)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Standard Platform Fee<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>The Value<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Moves the money from A to B.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Ensures the payment doesn&#8217;t fail and reconciles your orders.<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Can merchants avoid it?<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Yes (for Bank UPI)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">No, if using a Payment Gateway<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><b>Understanding the Two Scenarios of UPI<\/b><\/h2>\n<h3><b>Scenario A: UPI via Bank Account<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>MDR:<\/b><span style=\"font-weight: 400;\"> 0%<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Platform Fee:<\/b><span style=\"font-weight: 400;\"> Applicable<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The merchant pays only for the technology used to process the payment, not for moving money. This aligns perfectly with the government\u2019s intent, which is UPI as a public digital utility, supported by private innovation.<\/span><\/p>\n<h3><b>Scenario B: UPI via RuPay Credit Card<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>MDR:<\/b><span style=\"font-weight: 400;\"> ~1.1%\u20132%<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Platform Fee:<\/b><span style=\"font-weight: 400;\"> Added on top<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The total cost is higher because the merchant is accepting credit, even though the interface is UPI. In other words, this is not \u201cregular UPI\u201d; it\u2019s a credit card transaction disguised as UPI for user convenience.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td>\n<h4><b>Transaction Type<\/b><\/h4>\n<\/td>\n<td>\n<h4><b>MDR\u00a0<\/b><\/h4>\n<\/td>\n<td>\n<h4><b>Platform Fee\u00a0<\/b><\/h4>\n<\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">UPI (Bank Account)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0% (Govt Mandated)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Standard % (for the Payment Gateway)<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">UPI (RuPay Credit Card)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~1.1% to 2% (Market Rate)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Standard % (for the Payment Gateway)<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><b>UPI Charges on Razorpay Payment Gateway<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">When using Razorpay to accept UPI, the total cost deducted from your settlement is determined by the specific instrument the customer uses within their UPI app. Razorpay differentiates between a standard bank transfer and a credit-based transaction to ensure compliance with NPCI mandates while covering the technical overhead of the gateway.<\/span><\/p>\n<h3><b>Scenario A: UPI via Bank Account<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">For a standard transaction where a customer enters their UPI PIN to move money directly from their savings or current account, the MDR is 0%. Razorpay applies a <\/span><b>standard platform fee of 2%<\/b><span style=\"font-weight: 400;\"> (plus 18% GST). This fee is not for the movement of money but for the infrastructure, dashboarding, and security provided by the gateway.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>Scenario B: UPI via RuPay Credit Card<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">When a customer uses the UPI interface to pay via a linked RuPay Credit Card, the financial nature of the transaction changes. Because the bank is extending credit, an MDR of approximately <\/span><b>1.1% to 2%<\/b><span style=\"font-weight: 400;\"> is applied by the network. Razorpay\u2019s platform fee for this specific method is <\/span><b>2.15%<\/b><span style=\"font-weight: 400;\">. This reflects the increased complexity of managing credit-based settlements and higher security protocols.<\/span><\/p>\n<p>&nbsp;<\/p>\n<table>\n<tbody>\n<tr>\n<td>\n<h4><b>Transaction Type<\/b><\/h4>\n<\/td>\n<td>\n<h4><b>MDR\u00a0<\/b><\/h4>\n<\/td>\n<td>\n<h4><b>Platform Fee (Razorpay Payment Gateway)<\/b><\/h4>\n<\/td>\n<td>\n<h4><b>Total Impact<\/b><\/h4>\n<\/td>\n<\/tr>\n<tr>\n<td><b>UPI (Bank Account)<\/b><\/td>\n<td><span style=\"font-weight: 400;\">0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">2%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Platform Fee only<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>UPI (RuPay Credit Card)<\/b><\/td>\n<td><span style=\"font-weight: 400;\">~1.1% &#8211; 2%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">2.15%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">MDR + Platform Fee<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<h3><b>How the Processing and Settlement Workflow Functions<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">To understand how these charges appear on your settlement report, consider a merchant selling a product for \u20b91,000.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Selection<\/b><span style=\"font-weight: 400;\">: The customer scans your Razorpay QR or uses the Checkout and selects &#8220;UPI.&#8221;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>The Instrument<\/b><span style=\"font-weight: 400;\">:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">If they pay via Bank Account: The MDR is \u20b90. The platform fee is 2% (\u20b920). Your gross settlement (before GST) is \u20b9980.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">If they pay via RuPay Credit Card: The MDR is roughly 2% (\u20b920). The platform fee is 2.15% (\u20b921.50). Your gross settlement (before GST) is \u20b9958.50.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>The Technology Layer:<\/strong> During this process, Razorpay\u2019s &#8220;Smart Routing&#8221; checks the health of the customer\u2019s bank server. If the bank&#8217;s UPI server is down, Razorpay automatically reroutes the request through a secondary provider to ensure the transaction doesn&#8217;t fail.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Reconciliation:<\/strong> Once the payment is successful, the transaction is instantly logged in your Razorpay Dashboard, linked to the specific Order ID, and prepared for the next settlement cycle. You receive the funds minus the total of the MDR and Platform fees.<\/span><\/li>\n<\/ol>\n<h2><b>Why are RuPay Credit Cards on UPI treated differently?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">A RuPay Credit Card transaction on UPI is fundamentally a credit card transaction, simply using the UPI interface (QR or UPI intent) instead of traditional methods like swiping. The process involves the bank lending money to the customer, offering up to 45 days of interest-free credit, and assuming the risk of default and fraud. This inherent risk is the basis for the Merchant Discount Rate (MDR) that must be applied.<\/span><\/p>\n<h3><b>Why merchants still accept it<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The integration of RuPay Credit Cards on UPI is viewed by many businesses as a significant revenue driver rather than merely a cost. This is because enabling credit payment options directly influences customer behavior: customers tend to spend more when using credit compared to their bank balances, which directly leads to an increase in <\/span><a href=\"https:\/\/razorpay.com\/learn\/average-order-value-aov\/\"><b>Average Order Value (AOV)<\/b><\/a><span style=\"font-weight: 400;\">. Furthermore, the availability of a credit option on UPI improves conversion rates, particularly for higher-ticket purchases.<\/span><\/p>\n<h2><b>What &#8220;Zero Fee&#8221; Payment Gateways aren&#8217;t telling you<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">You might find payment gateways claiming &#8220;Zero UPI Fees.&#8221; This is where the &#8220;Hidden Math&#8221; comes in. Every payment gateway has massive costs for servers, security, and engineering. If they aren&#8217;t charging a transparent platform fee, they are usually recouping that money elsewhere.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td>\n<h4><b>Payment Gateway<\/b><\/h4>\n<\/td>\n<td>\n<h4><b>Visible Fees<\/b><\/h4>\n<\/td>\n<td>\n<h4><b>Hidden Costs<\/b><\/h4>\n<\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Payment Gateway X<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u201c0% UPI Fees\u201d<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b910,000 AMC + \u20b95,000 setup<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Razorpay Payment Gateway<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90 setup, \u20b90 AMC<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Pay only per transaction<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<h2><b>Why the Platform Fee is often your best investment<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Success rate beats discounts<\/b><span style=\"font-weight: 400;\"> &#8211; A gateway with lower fees but poor success rates quietly costs more in failed transactions. Higher success rates mean more completed payments and higher realized revenue.<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>One API, many payment modes &#8211; <\/b><span style=\"font-weight: 400;\">A single API unlocks UPI, domestic and international cards, and pay-later options. Merchants spend less time integrating and more time scaling.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Automated reconciliation is a game-changer &#8211; <\/b><span style=\"font-weight: 400;\">Automated reconciliation matches every Payment ID to its Order ID instantly. This removes daily manual checks and saves businesses 8\u201310 hours of accounting work each week<\/span><\/li>\n<\/ul>\n<h2><b>Conclusion\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">UPI serves as a public good, whereas payment gateways are a premium infrastructure, making it a mistake to evaluate them by the same metrics. MDR is a measure of network cost, while a Platform Fee reflects the reliability of receiving business payments. Ultimately, smart businesses prioritize optimizing for Net Realized Revenue over simply seeking the cheapest fee.<\/span><\/p>\n<div style=\"background-color: #f5f9fc; padding: 24px; border-radius: 12px; text-align: center; max-width: 720px; margin: 0 auto;\">\n<h2 style=\"color: #1a73e8; margin: 0; font-size: 24px; font-weight: bold;\">Make Sense of Every UPI Transaction<\/h2>\n<p style=\"color: #4b5563; font-size: 16px; margin: 8px 0 12px 0;\">Explore how Razorpay payment gateway prices UPI payments and choose what works best for your business.<\/p>\n<p><a style=\"background-color: #1a73e8; color: #ffffff; font-weight: 600; padding: 10px 20px; border-radius: 8px; font-size: 16px; text-decoration: none; display: inline-block; margin: 0;\" href=\"https:\/\/razorpay.com\/\"><em><strong>Get Started with Razorpay<\/strong><\/em><br \/>\n<\/a><\/p>\n<\/div>\n<h2><b>Frequently Asked Questions\u00a0<\/b><\/h2>\n<h3><b>1. Is UPI really free for all transactions?\u00a0<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">For customers and small peer-to-peer transfers, yes. However, for merchants, while MDR is 0% on bank-to-bank UPI, transactions made via RuPay Credit Cards and over \u20b92,000 carry an interchange fee\/MDR (usually around 1.1% to 1.99%), which the merchant must bear.<\/span><\/p>\n<h3><b>2. Why am I being charged for RuPay Credit Card payments on UPI?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Unlike a standard bank-to-bank UPI transfer, a RuPay Credit Card payment involves a credit limit provided by a bank. This attracts an <\/span><b>MDR (Merchant Discount Rate)<\/b><span style=\"font-weight: 400;\"> similar to a traditional credit card swipe to cover the costs of the credit cycle and insurance.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><b><\/b><\/p>\n<h3><b>3. What is the difference between MDR and Platform Fees?\u00a0<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">MDR is the &#8220;network cost&#8221; paid to banks and NPCI to move the money. A <\/span><b>Platform Fee<\/b><span style=\"font-weight: 400;\"> (or Gateway Fee) is what you pay the provider, like Razorpay, for the technology, high success rates, security, and automated reconciliation tools.<\/span><\/p>\n<h3><b>4. Does the Merchant Discount Rate (MDR) for RuPay Credit Cards change based on my business type?<\/b><\/h3>\n<p><b>Yes.<\/b><span style=\"font-weight: 400;\"> Unlike Bank UPI (which is $0%MDR across the board), the MDR for <\/span><b>RuPay Credit Card on UPI<\/b><span style=\"font-weight: 400;\"> is dynamic. It is calculated uniquely based on your business size and industry risk level. This is an industry-standard mandate that applies to every payment gateway.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here is how the charges are structured:<\/span><\/p>\n<p><b>By Business Size (Turnover):<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Small Businesses:<\/b><span style=\"font-weight: 400;\"> If your annual turnover is <\/span><b>up to \u20b920 Lakhs<\/b><span style=\"font-weight: 400;\">, you pay a substantially lower (often <\/span><b>0%<\/b><span style=\"font-weight: 400;\">) MDR for transactions below \u20b92,000. This is a government-backed incentive to help small vendors grow.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><b style=\"font-size: 19px;\">Medium &amp; Large Businesses:<\/b><span style=\"font-weight: 400;\"> Any business with a turnover <\/span><b style=\"font-size: 19px;\">above \u20b920 Lakhs<\/b><span style=\"font-weight: 400;\"> is required to pay a higher, standard MDR on all RuPay Credit Card transactions, regardless of the amount.<\/span><\/span><\/li>\n<\/ul>\n<h3><b>5. Why are there separate charges for using a RuPay Credit Card on UPI when standard UPI transactions already incur a fee when paying via a payment gateway?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Merchants often confuse the interface with the instrument. While both use a QR code, a standard UPI payment is a &#8220;Push&#8221; from a bank account (Cash), while RuPay on UPI is a &#8220;Pull&#8221; from a credit line (Loan). Because RuPay Credit Card involves a bank lending money to your customer for 45 days, the banks charge an MDR (Merchant Discount Rate) to cover that risk. Razorpay clears the confusion by showing you the split: the Government-mandated 0% MDR applies only to Bank Transfers. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Merchants often confuse the interface with the instrument. While both use a QR code, a standard UPI payment is a &#8220;Push&#8221; from a bank account (Cash), while RuPay on UPI is a &#8220;Pull&#8221; from a credit line (Loan). Because RuPay Credit Card involves a bank lending money to your customer for 45 days, the banks charge an MDR (Merchant Discount Rate) to cover that risk. Razorpay clears the confusion by showing you the split: the Government-mandated 0% MDR applies only to Bank Transfers. For RuPay CC, you are essentially accepting a Credit Card, and the pricing reflects that reality.<\/span><\/p>\n<p><script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"FAQPage\",\n  \"mainEntity\": [\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Is UPI really free for all transactions?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"For customers and small peer-to-peer transfers, UPI is free. However, for merchants, while MDR is 0% on bank-to-bank UPI payments, transactions made via RuPay Credit Cards and transactions above \u20b92,000 attract an interchange fee or MDR (typically around 1.1% to 1.99%), which is borne by the merchant.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Why am I being charged for RuPay Credit Card payments on UPI?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Unlike a standard bank-to-bank UPI transfer, a RuPay Credit Card payment involves a credit limit provided by a bank. This attracts a Merchant Discount Rate (MDR), similar to a traditional credit card transaction, to cover the costs of the credit cycle, risk, and insurance.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"What is the difference between MDR and Platform Fees?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"MDR is the network cost paid to banks and NPCI for moving money through the payment system. Platform Fees (or Gateway Fees) are charged by payment providers like Razorpay for offering the technology layer, including high success rates, security, smart routing, dashboards, and automated reconciliation.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Does the Merchant Discount Rate (MDR) for RuPay Credit Cards change based on my business type?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Yes. Unlike Bank UPI, which has a 0% MDR, the MDR for RuPay Credit Card payments on UPI is dynamic. It varies based on your business turnover and industry risk profile. Small businesses with an annual turnover of up to \u20b920 lakhs often pay a lower or 0% MDR for transactions below \u20b92,000, while businesses with turnover above \u20b920 lakhs are charged a standard MDR on all RuPay Credit Card transactions. This structure is mandated across the industry and applies to all payment gateways.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Why are there separate charges for using a RuPay Credit Card on UPI when standard UPI transactions already incur a payment gateway fee?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Merchants often confuse the interface with the payment instrument. A standard UPI payment is a push transaction from a bank account, while RuPay Credit Card on UPI is a pull transaction from a credit line. Since RuPay Credit Card payments involve banks lending money to customers for up to 45 days, an MDR is charged to cover this credit risk. The government-mandated 0% MDR applies only to bank-to-bank UPI transfers, while RuPay Credit Card payments are priced like credit card transactions.\"\n      }\n    }\n  ]\n}\n<\/script><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The prevailing narrative suggests that UPI is a free service. For consumers and peer-to-peer transfers, this is largely true. However, for merchants, the settlement report often tells a different story. If you\u2019ve wondered why a &#8220;Zero MDR&#8221; government initiative still results in fees on your payment gateway (PG) dashboard, you are likely misunderstanding two distinct<\/p>\n","protected":false},"author":174,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[498],"tags":[],"class_list":{"0":"post-25839","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-upi"},"_links":{"self":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/25839","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/users\/174"}],"replies":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/comments?post=25839"}],"version-history":[{"count":2,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/25839\/revisions"}],"predecessor-version":[{"id":25842,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/25839\/revisions\/25842"}],"wp:attachment":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media?parent=25839"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/categories?post=25839"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/tags?post=25839"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}