NewDelhi: The Ministry of Finance has clarified that consumers will not be charged for making payments through the Unified Payments Interface (UPI), while any future merchant discount rate (MDR) will be limited to select transactions above a specified threshold.
Government has said that all person-to-person (P2P) UPI transactions will continue to remain free and there will be no blanket MDR on merchants.
UPI users must note the following key points
1. No charges for users: Consumers making payments will not face any transaction charges.
2. P2P transactions free: All Person-to-Person transactions will continue to be free of charge.
3. Nominal MDR for merchants: As and when MDR charges are introduced, they will apply only to a limited set of merchant transactions, above a certain threshold, at a nominal rate, far lower than debit or credit card MDRs.
4. Vast majority of the transactions will remain free of charge for merchants on UPI. MDR, if introduced, will only be threshold based and not blanketly levied to all.
5. Once the Parliament passes the Taxation and Other Laws (Amendment) Bill, 2026, which proposes to amend Section 10A of the Payment and Settlement Systems Act, 2007, the “UPI and Services Steering Committee” headed by NPCI will decide on the MDR, if any.
Government has refuted some of the media reports that suggested that external influences may be driving policy changes.
“This is unfounded, completely false and misleading. If external pressure had been a factor, the government would not have introduced UPI in 2016 or made it free of charge for both merchants as well as citizens since January 2020 and ensured that it became the world’s largest real time interoperable payment system,” said the Ministry of Finance.
It added, “The amendment should therefore be viewed in the context of the Government’s broader objective of ensuring that India’s digital payment infrastructure remains sustainable, competitive, innovative and capable of serving the country’s rapidly expanding digital economy.”
Bureau Report
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