Railway UPI payments above Rs 2,000 to attract flat Rs 5 MDR from October 15

Railway passengers paying for tickets through UPI will see a new charge structure take effect from October 15, but the levy is not meant to inflate their fares. Under the revised Unified Payments Interface framework, payments above Rs 2,000 to regular merchants will attract a Merchant Discount Rate (MDR) of 0.4 per cent. Railway ticketing, however, has been placed in a special category, where the applicable charge is a flat Rs 5 per transaction rather than a percentage of the ticket value.

A charge on the merchant side

Saurabh Jain, Senior Divisional Commercial Manager of the Kota Division, said the Rs 5 charge will not be passed on to passengers. MDR is a payment-processing fee that applies to the merchant, and the Union Finance Ministry has advised banks to ensure it is not recovered from customers.

"Passengers booking railway tickets worth more than Rs 2,000 through UPI will not have to shell out an additional amount when the new Merchant Discount Rate regime comes into effect from October 15," he said.

So a ticket costing Rs 3,000 should not become Rs 3,005 because of the new rule. Likewise, a Rs 5,000 ticket would attract only Rs 5 on the merchant side, compared with Rs 20 under the regular 0.4 per cent rate.

How the slabs work

• Up to Rs 2,000: no MDR
• Above Rs 2,000 for regular merchants: 0.4 per cent MDR
• Above Rs 2,000 for railway ticketing: flat Rs 5 MDR
• Passenger: the MDR should not be charged separately

A Rs 10,000 payment to a regular merchant would attract Rs 40 at 0.4 per cent, while a railway ticket transaction of the same value would attract only the flat Rs 5 on the merchant side. Railway ticketing sits in this special category alongside sectors such as telecom, insurance, fuel and utility payments.

Fares should remain unchanged

Jain said the new MDR does not mean railway fares will automatically rise. "A passenger purchasing a Rs 3,000 railway ticket through UPI should not see the fare increase to Rs 3,005 merely because of the new MDR. The additional Rs 5 is a cost associated with processing the payment and is not supposed to be recovered from the passenger," he said.

UPI transactions of up to Rs 2,000 will remain outside the new levy, and person-to-person UPI transfers will stay free regardless of the amount.

Why the flat rate matters

While Rs 5 is small for an individual booking, the aggregate cost could be substantial given the volume of digital ticket sales. Jain illustrated: if one lakh railway ticket transactions exceeding Rs 2,000 were made through UPI in a day, the Rs 5 MDR would amount to Rs 5 lakh daily, or about Rs 18.25 crore over a year.

The actual financial impact would depend on how many such bookings are paid for through UPI and how the cost is shared among the Railways, IRCTC, banks and payment service providers. The flat-rate structure still gives railway transactions a significant concession compared with the general 0.4 per cent MDR on large merchant payments.

For passengers, the takeaway is straightforward: booking a ticket worth more than Rs 2,000 through UPI should not become more expensive because of the new MDR, which applies on the merchant side.