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New Delhi: UPI transactions between individuals and merchants worth over Rs 2,000 will be subject to a merchant discount rate (MDR) starting next month, the government said, a month after parliament passed a law allowing for such levies on the as-yet free payment system.

Transactions between individuals will continue to be free when the new MDRs kick in on October 15, the National Payments Corporation of India (NPCI) said on Tuesday, stating that the levy will generate funds that can be used to improve UPI and bolster its security.

While person-to-merchant UPI payments of up to Rs 2,000 will also remain free, those over this threshold will incur an MDR of 0.4%, with a cap of Rs 300 per transaction.

Such payments made with merchants in essential and low-margin sectors including the railways, telecom, fuel and insurance will however attract a flat MDR of Rs 5 per transaction.

Payments towards mutual funds,........

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