India, Sept. 15 -- India's ubiquitous UPI payment system is set for a significant change from October 15, with the introduction of a merchant discount rate (MDR) on select transactions.

Under the new framework, merchants will be charged an MDR of 0.4% on person to merchant (P2M) UPI transactions above Rs.2,000. The charge will be capped at Rs.300 for transactions worth Rs.75,000 or more.

The October 15 change does not necessarily make UPI a paid service for consumers. Instead, it introduces a commercial layer on the merchant side. With a 0.4% MDR for regular P2M transactions above Rs.2,000 and a Rs.300 cap for transactions of Rs.75,000 and above.

The framework keeps P2P payments free, protects P2PM merchants from MDR and provides lower...