1 week ago
India Must Preserve Zero MDR As UPI Expands Nationwide
Experts want small shops to continue using UPI without paying a transaction fee.
They say this helps street vendors, small businesses and low-income families accept digital payments.
Keeping payments affordable has helped more people join the formal financial system.
It has also helped businesses use digital records and access financial services.
However, the payments system must still find ways to remain financially sustainable.
The discussion follows a change in the law that could allow charges on some electronic payments.
UPI is expanding into smaller cities, towns and rural areas.
In July 2026, it processed a record number of payments.
Industry experts urged India to retain zero Merchant Discount Rate for small merchants and low-value UPI payments.
Experts warned that user fees could hurt poor households, informal businesses and street vendors.
Zero MDR has encouraged merchant adoption and access to digital bookkeeping, formal finance and credit.
The debate follows a parliamentary amendment allowing charges on government-notified electronic payment modes and transactions.
UPI processed a record 23.66 billion transactions worth Rs 29.88 lakh crore in July 2026.
- Who
- Industry experts, including representatives from Grant Thornton Bharat, Janpahal and the Indian Banks’ Association, urged the government to retain zero MDR for small merchants.
- What
- The experts called for zero Merchant Discount Rate on UPI transactions involving small merchants and low-value payments.
- Where
- India, including Tier-3 and Tier-4 cities and rural areas.
- When
- The recommendations were reported on August 20, 2026; UPI’s record monthly performance cited in the report occurred in July 2026.
- Why
- Experts said zero MDR keeps digital payments affordable, supports merchant adoption and protects financial inclusion among low-income and informal-economy participants.
Key facts
- Policy recommendation
- Retain zero MDR for small merchants and low-value UPI payments.
- July 2026 UPI volume
- 23.66 billion transactions, the highest monthly volume reported.
- July 2026 UPI value
- Rs 29.88 lakh crore.
- Year-on-year volume growth
- UPI transaction volume rose 22% in July 2026.
- Month-on-month volume growth
- Transaction volume increased 4.1% from June 2026.
- Year-on-year value growth
- Transaction value rose 19% in July 2026.
- Legal development
- A parliamentary amendment to the Payment and Settlement Systems Act, 2007 enables the government to notify electronic payment modes and transactions on which charges may be levied.
Quotes
Dharmender Jhamb
Partner at Grant Thornton Bharat, industry analyst
“Zero MDR has been a defining policy intervention in democratising digital payments in India. It has lowered barriers to adoption, accelerated merchant acceptance, and reinforced UPI’s position as a globally admired digital public infrastructure.”
freepressjournal.in
Sources
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