P2PM vs P2M: Check Your UPI Merchant Category & Exemption
Your payment provider confirms your merchant category. A small shop, low monthly sales or a particular business name does not automatically establish P2PM exemption.
What P2PM and P2M mean
| Category | Meaning for MDR |
|---|---|
| P2PM: Person-to-Person-Merchant | Exempt micro-merchant category, including the stated monthly UPI collection conditions. |
| P2M: Person-to-Merchant | Merchant account category; rate depends on the payment amount and mapped sector. It is not always 0.4%. |
The ₹1 lakh and three-month rule
The DFS FAQ describes P2PM merchants receiving up to ₹1 lakh per month through UPI QR. In FAQ question 29, it states that providers monitor inward UPI credits and transition P2PM merchants to P2M after more than ₹1 lakh per month for three consecutive months.
The threshold concerns inward UPI collections, not all shop sales. Do not self-assign an exemption from one month's total; ask your provider to confirm the account's current status.
Ask your provider these questions
- Is this account currently acquired as P2PM or P2M?
- Which merchant sector is mapped to it, and what rate applies to bank-account UPI?
- How are inward collections monitored, and when would my classification change?
- What tax and other charges appear on my invoice?
Use provider support, your merchant agreement or a provider-issued statement. Menu names and available account details vary by app. This guide does not claim an exact path through a provider's settings.
GST registration is a separate question
The DFS FAQ says GST registration is not required to benefit from P2PM zero-MDR protection. It should not be used as a shortcut to infer your account classification.
Estimate your merchant fee
Model one bill or your monthly bill mix with explicit category, date and tax assumptions.
Open fee calculatorCommon questions
Is my kirana shop automatically P2PM?
No. Your provider must confirm the classification and applicable collection conditions. The shop name alone does not establish exemption.
Does one payment above ₹2,000 remove P2PM exemption?
No. The DFS FAQ says applicability depends on account categorisation. A larger individual payment does not by itself impose MDR on an exempt P2PM merchant.
Do I need a new QR because the framework changes?
The DFS FAQ says existing QR infrastructure continues to work. Confirm any account-specific instructions with your provider; changing a QR does not establish exemption.
Sources and review date
Reviewed against the DFS FAQ dated 15 September 2026 and the Ministry of Finance announcement on 3 October 2026. This page does not update automatically. Recheck policy and provider implementation after 15 October.
Create a UPI QR for your bill amount
Enter the final bill and show a QR with the amount pre-filled. Payment-app behaviour may vary. Check receipt on your existing soundbox or business app.
Open shop counter