Paying Over Rs 3,000 via UPI? You May Face New Charges Soon
Centre likely to add MDR on UPI payments above ₹3,000 to support banks and fintech services amid rising costs.
image for illustrative purpose
The Indian government is weighing a proposal to introduce a Merchant Discount Rate (MDR) on UPI transactions exceeding Rs 3,000. The move, under consideration, aims to address cost concerns raised by banks and payment platforms.
Officials said the volume of merchant UPI payments has soared post-pandemic, contributing to over 80 per cent of India’s digital retail payments. The transaction value has surpassed Rs 60 lakh crore, largely driven by rapid digitization during COVID-19.
Despite the surge, the zero MDR rule enforced since January 2020 has constrained private investment in digital payment infrastructure. Banks and fintech companies argue that the absence of MDR revenue makes it unsustainable to manage the technology and operational costs for handling high-value transactions.
The proposed policy suggests applying MDR to transactions above Rs 3,000, potentially shifting some cost to either merchants or customers. Payments for utility bills, online purchases, and retail buys may be impacted. However, peer-to-peer payments under the threshold could remain unaffected.
