Archive · 25 Sep 2026
Trade Body Seeks Rollback of UPI MDR on Large Payments
A new fee may be charged on some UPI payments above ₹2,000.
The fee is called MDR and is usually paid by the merchant receiving the money.
The government says customers will not be charged this fee.
A trade group representing shopkeepers and traders wants the fee cancelled.
It worries that stores may stop accepting UPI for expensive purchases.
The group says large UPI payments are a small share of transactions but represent a lot of money.
The fee would generally be 0.4%, with limits for very large payments.
Some essential services and financial transactions would have different rates.
The government says most UPI payments will not be affected.
The Confederation of All India Traders said UPI MDR could affect 6 crore shopkeepers and traders and urged Finance Minister Nirmala Sitharaman to withdraw it.
The proposed 0.4% MDR would apply to certain UPI merchant payments above ₹2,000, while 96% of transactions would remain unaffected, according to the report.
The Confederation of All India Traders said payments above ₹2,000 represent about 4% of transactions but roughly ₹131 lakh crore in value.
The trade body estimates eligible UPI payments could decline by up to 50%, potentially encouraging merchants and customers to use cash for larger purchases.
The government says merchants, not customers, will pay the fee, and that MDR collections will be distributed among banks, payment gateways and UPI apps rather than going to government coffers.
- Who
- The Confederation of All India Traders, Finance Minister Nirmala Sitharaman, the National Payments Corporation of India and the government are involved.
- What
- A trade body is seeking the rollback of merchant discount rates on certain UPI payments above ₹2,000.
- When
- The National Payments Corporation of India issued its circular on September 15; the proposed charge is scheduled to take effect on October 15, and the GST Council is due to discuss related GST on October 7.
- Where
- The policy concerns UPI merchant payments in India.
- Why
- The trade body says the fee could hurt merchants and push larger transactions back toward cash, while the government describes it as a sustainable revenue framework and says customers will not bear the charge.
Trade Body and Merchant Concerns
Government and Payment-Ecosystem Position
Effect on merchants
Trade Body and Merchant Concerns
The trade body says the MDR could affect 6 crore shopkeepers and traders and wants it rolled back.
Government and Payment-Ecosystem Position
The government says the fee is a service charge imposed by payment-system participants, not a government tax, cess or surcharge.
Risk of cash returning
Trade Body and Merchant Concerns
The trade body estimates UPI payments above ₹2,000 could fall by up to 50% as merchants and customers reconsider larger digital purchases.
Government and Payment-Ecosystem Position
The government says transactions below ₹2,000 will not attract the fee and that 96% of transactions will remain unaffected.
Who bears the charge
Trade Body and Merchant Concerns
Merchants are concerned about the financial impact of paying the MDR and the possible effect on UPI acceptance.
Government and Payment-Ecosystem Position
Finance Minister Nirmala Sitharaman says merchants, not customers, will pay and that the charge will not be passed on to customers.
- Affected payments
- Certain UPI merchant payments above ₹2,000
- Standard MDR
- 0.4% of an eligible transaction
- Example charges
- ₹12 on ₹3,000; ₹40 on ₹10,000; ₹200 on ₹50,000
- Maximum cap
- ₹300 for transactions of ₹75,000 and above
- UPI volume in FY2025-26
- About 24,162 crore transactions worth roughly ₹314 lakh crore
- Large-payment share
- Payments above ₹2,000 were about 4% of transactions but around ₹131 lakh crore in value
- Government position
- Customers will not pay the MDR, and the collections will not go to government coffers
- Distribution of MDR
- Government sources said 40% would go to customers’ banks, 30% to the payment gateway, 20% to the UPI app and 10% to the sponsoring bank