Transaction fees (MDR)

MDR (merchant discount rate) is split between the parties that move the money: the customer's bank (the issuer), the merchant's bank (the acquirer), the card network or UPI app, and the gateway. Gateways usually quote one all-in figure, sometimes called TDR (transaction discount rate) or a platform fee, and deduct it from each payment before settlement. In India, 18% GST is charged on the fee, not on the payment.

Rates depend on the method. RBI caps debit card MDR at 0.4% (at most ₹200 a payment) for merchants with turnover up to ₹20 lakh a year, and 0.9% (at most ₹1,000) above that. Credit card rates are set commercially and cost more, with premium, corporate and international cards the most expensive. UPI was free for merchants from 2020; from 15 October 2026, most payments above ₹2,000 carry 0.4%, capped at ₹300. Indian gateways typically charge about 2% on most methods and about 3% on premium and international cards.

Refunds usually do not give back the original fee, and chargebacks can add a fee of their own, so a refunded sale still costs money. The UPI framework also forbids passing MDR on to customers as a surcharge.