Finance Ministry Denies Reports of MDR Charges on UPI Payments
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The Union Finance Ministry has categorically denied recent media reports suggesting that the government is planning to impose a Merchant Discount Rate (MDR) on high-value UPI transactions. In a firm statement posted on social media platform X, the ministry called such claims "false, baseless, and misleading."
The clarification comes in response to speculation that the government may allow banks to levy MDR on UPI transactions above ₹3,000 to support financial institutions and payment service providers. Some reports even suggested a shift in MDR calculation—from merchant turnover to per-transaction value.
The ministry dismissed the chatter, stating, "Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading. Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens."
"The government remains fully committed to promoting digital payments via UPI," it added.
Payment Council Flags Sustainability Concerns Over Zero MDR Policy on UPI
Earlier this year, the Payment Council of India urged the government led by Prime Minister Narendra Modi to rethink the Zero MDR (Merchant Discount Rate) policy on UPI transactions.
In a letter to the government, the industry body raised alarms over the financial strain on the digital payments ecosystem due to the continued Zero MDR regime, which has been in place since January 2020.
While the government has offered some financial support, including a ₹1,500 crore allocation to help cover operational expenses, the Council noted this amount falls far short of the estimated ₹10,000 crore needed annually to sustain and expand UPI infrastructure.
To ease the pressure, the Council proposed charging MDR on RuPay debit card transactions for all merchants, and a modest 0.3% MDR on UPI transactions — but only for large merchants.
UPI continues to dominate India’s payment landscape. On June 1, it clocked 644 million transactions, followed by 650 million on June 2 — surpassing Visa’s average of 639 million daily transactions in FY24 (though Visa does not disclose daily figures).
According to government data, UPI accounted for 80% of all retail digital payments in FY 2023–24, with over 131 billion transactions valued at more than ₹200 lakh crore.
The clarification comes in response to speculation that the government may allow banks to levy MDR on UPI transactions above ₹3,000 to support financial institutions and payment service providers. Some reports even suggested a shift in MDR calculation—from merchant turnover to per-transaction value.
The ministry dismissed the chatter, stating, "Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading. Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens."
"The government remains fully committed to promoting digital payments via UPI," it added.
Payment Council Flags Sustainability Concerns Over Zero MDR Policy on UPI
Earlier this year, the Payment Council of India urged the government led by Prime Minister Narendra Modi to rethink the Zero MDR (Merchant Discount Rate) policy on UPI transactions.
In a letter to the government, the industry body raised alarms over the financial strain on the digital payments ecosystem due to the continued Zero MDR regime, which has been in place since January 2020.
While the government has offered some financial support, including a ₹1,500 crore allocation to help cover operational expenses, the Council noted this amount falls far short of the estimated ₹10,000 crore needed annually to sustain and expand UPI infrastructure.
To ease the pressure, the Council proposed charging MDR on RuPay debit card transactions for all merchants, and a modest 0.3% MDR on UPI transactions — but only for large merchants.
UPI continues to dominate India’s payment landscape. On June 1, it clocked 644 million transactions, followed by 650 million on June 2 — surpassing Visa’s average of 639 million daily transactions in FY24 (though Visa does not disclose daily figures).
According to government data, UPI accounted for 80% of all retail digital payments in FY 2023–24, with over 131 billion transactions valued at more than ₹200 lakh crore.
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