Big UPI Change: How Your Purchases Could Soon Be Cheaper Than Using Credit Cards
Paying with UPI may soon be more rewarding than using your credit card. In a move aimed at boosting digital transactions , the government is exploring a plan to make UPI payments not just quicker but also more cost-effective for consumers.
Why UPI Could Soon Cost You Less
Unlike credit cards, which charge merchants a 2–3% fee known as the merchant discount rate (MDR), UPI transactions are free of such charges. When customers pay via credit card, businesses either absorb the MDR or pass it on — effectively raising prices. UPI, on the other hand, allows merchants to receive the full amount, making it a more economical choice.
Now, the Ministry of Consumer Affairs is considering ways to transfer this cost benefit directly to consumers. If implemented, this could mean real savings - for example, paying ₹98 for a product that would otherwise cost ₹100 with a credit card.
Discounts as Instant Incentives
The proposed plan aims to reward users instantly by offering upfront discounts at checkout when they choose UPI. This could drive greater adoption of the already popular digital payment method and make cashless shopping more appealing.
Talks Underway with Key Stakeholders
The consumer affairs ministry is expected to consult with a range of stakeholders — including e-commerce companies, payment service providers, NPCI, the Department of Financial Services, and consumer rights groups. A final decision may be made following a crucial meeting in June.
However, there’s some resistance. The Payments Council of India has been advocating for MDR charges to be applied to UPI and RuPay debit cards — a move that could undermine the zero-fee advantage UPI currently offers.
UPI Payments to Get Speed Boost from June 16
Adding to the good news, UPI transactions are set to become faster starting June 16, 2025. A new mandate by NPCI will reduce the API response time, cutting transaction times from 30 seconds to just 15 seconds for both financial and non-financial operations.
UPI’s Unstoppable Rise
UPI has already cemented its place as India’s most preferred digital payment method. In FY25 alone, it clocked 185.85 billion transactions — a 42% jump in volume — and processed a staggering ₹260.56 trillion, marking a 30% increase in value year-on-year.
With discounts on the horizon and transactions becoming twice as fast, UPI is set to become even more attractive for Indian consumers. If the government’s plan moves forward, paying via UPI won’t just be convenient — it’ll be smarter for your wallet too.
Why UPI Could Soon Cost You Less
Unlike credit cards, which charge merchants a 2–3% fee known as the merchant discount rate (MDR), UPI transactions are free of such charges. When customers pay via credit card, businesses either absorb the MDR or pass it on — effectively raising prices. UPI, on the other hand, allows merchants to receive the full amount, making it a more economical choice. Now, the Ministry of Consumer Affairs is considering ways to transfer this cost benefit directly to consumers. If implemented, this could mean real savings - for example, paying ₹98 for a product that would otherwise cost ₹100 with a credit card.
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Discounts as Instant Incentives
The proposed plan aims to reward users instantly by offering upfront discounts at checkout when they choose UPI. This could drive greater adoption of the already popular digital payment method and make cashless shopping more appealing. Talks Underway with Key Stakeholders
The consumer affairs ministry is expected to consult with a range of stakeholders — including e-commerce companies, payment service providers, NPCI, the Department of Financial Services, and consumer rights groups. A final decision may be made following a crucial meeting in June.However, there’s some resistance. The Payments Council of India has been advocating for MDR charges to be applied to UPI and RuPay debit cards — a move that could undermine the zero-fee advantage UPI currently offers.
UPI Payments to Get Speed Boost from June 16
Adding to the good news, UPI transactions are set to become faster starting June 16, 2025. A new mandate by NPCI will reduce the API response time, cutting transaction times from 30 seconds to just 15 seconds for both financial and non-financial operations. UPI’s Unstoppable Rise
UPI has already cemented its place as India’s most preferred digital payment method. In FY25 alone, it clocked 185.85 billion transactions — a 42% jump in volume — and processed a staggering ₹260.56 trillion, marking a 30% increase in value year-on-year. With discounts on the horizon and transactions becoming twice as fast, UPI is set to become even more attractive for Indian consumers. If the government’s plan moves forward, paying via UPI won’t just be convenient — it’ll be smarter for your wallet too.
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