UPI Stays Free for Users; MDR on Select Merchant Deals

The Indian government has clarified that Unified Payments Interface (UPI) transactions will continue to be free for users. This statement addresses concerns regarding potential charges on digital payments, ensuring peer-to-peer (P2P) transfers remain unaffected.

The Ministry of Finance indicated that a Merchant Discount Rate (MDR) on UPI would only apply to a limited set of merchant transactions. This would specifically target transactions exceeding a certain threshold, potentially **Rs 2000**, should such charges be implemented in the future.

Targeted MDR for Sustainability

Any future MDR on these specific merchant transactions would be set at a fee lower than current credit and debit card charges. The government views this measure as crucial for UPI’s long-term sustainability, technological advancement, and resilience against emerging risks.

• UPI transactions for users will remain **free**.
• MDR would apply only to specific **merchant transactions** above Rs 2000.
• Peer-to-peer (P2P) transactions will also remain **free**.
• Any MDR rate would be **lower** than existing credit and debit card fees.

The government has explicitly dismissed reports suggesting external influences are driving these policy considerations. This clarification underscores an internal assessment of the digital payments ecosystem.

Industry Leaders Support Infrastructure Investment

Industry figures support the proposed introduction of MDR for large merchants. Harsh Vardhan Masta, CEO of PB PAY (PB Fintech), stated that such a move would foster a more sustainable and resilient digital payments ecosystem.

Masta added that this would enable necessary investments in infrastructure, cybersecurity, and innovation. These investments are deemed vital for the continued growth and security of India’s digital payment landscape.