POS Machine Charges in India – Complete Guide for Merchants (2026)
POS machine charges are the fees that merchants pay to banks or service providers for accepting card and digital payments through a Point of Sale (POS) machine. These charges can vary based on the bank, transaction type, and business category.
Quick Summary
- Used by: Shops, traders, restaurants, service providers
- Main cost: MDR (Merchant Discount Rate)
- Extra charges: Installation, rental, GST (if applicable)
- Payment modes: Debit card, credit card, NFC, UPI (in some POS)
- Settlement: T+1 or T+2 days (typically)
Types of POS Machine Charges
1. Merchant Discount Rate (MDR)
MDR is a percentage deducted from each transaction amount.
| Payment Type | Typical MDR Range |
|---|---|
| Debit Card (₹0–₹2,000) | 0% (as per govt rules) |
| Debit Card (>₹2,000) | 0.9% – 1% |
| Credit Card | 1% – 2% |
| International Cards | 2% – 3% |
Actual MDR may vary by bank, card network, and merchant category.
2. POS Machine Rental Charges
Some banks charge a monthly or annual rental for the POS terminal.
| Type | Typical Cost |
|---|---|
| Monthly Rental | ₹150 – ₹500 |
| Annual Rental | ₹1,500 – ₹3,000 |
| Zero Rental Plans | Available (with conditions) |
Rental is often waived if monthly transaction volume meets the bank’s criteria.
3. Installation & Setup Charges
- One-time installation fee may apply
- Many banks offer free installation for new merchants
4. Maintenance & Replacement Charges
- Normal wear & tear: Usually free
- Damage or loss: Replacement charges may apply
POS Machine Charges for UPI Payments
- UPI via QR or POS: 0% MDR for most merchant categories
- No rental for basic UPI QR codes
- Some smart POS devices may have hardware rental
Settlement Charges & Time
- Settlement time: T+1 or T+2 working days
- Some banks offer same-day settlement at extra cost
- No separate settlement fee in most cases
Government Rules on POS Charges
- Debit card MDR for transactions up to ₹2,000 is 0%
- Banks are compensated by the government for this waiver
- Credit card MDR is not regulated and decided by banks
POS Machine Charges – Example Calculation
If a customer pays ₹1,000 using a credit card and MDR is 1.8%:
- MDR deducted: ₹18
- Amount credited to merchant: ₹982
How to Reduce POS Machine Charges
- Prefer debit cards & UPI
- Negotiate MDR with your bank
- Maintain higher monthly transaction volume
- Choose the right POS plan for your business
Common POS Problems & Charges Related Issues
Higher MDR Deduction?
- Check card type (credit vs debit)
- Verify merchant category code (MCC)
Delayed Settlement?
- Check bank holidays
- Contact POS provider with transaction ID
FAQs on POS Machine Charges
Is POS machine free for small shops?
A. Some banks offer zero-rental POS machines if minimum monthly transactions are met.
Are POS charges GST applicable?
A. Yes, GST may apply on MDR and rental charges.
Can I have multiple POS machines?
A. Yes, subject to bank approval and charges.
Is UPI cheaper than POS?
A. Yes, UPI usually has 0% MDR, making it cost-effective.
Conclusion
POS machine charges mainly include MDR, rental, and maintenance costs. While debit card and UPI transactions are affordable, credit card payments attract higher MDR. Merchants should compare bank offerings and choose a plan that suits their transaction volume.
