5 hrs ago
Government Talks Aim To Keep New UPI Fees Off Customers
India’s government is talking with companies that help process UPI payments.
A new fee will start on October 15 for some large payments made to businesses.
The fee is 0.4% when the payment is above Rs 2,000.
Businesses, not customers, are supposed to pay it.
The government wants to make sure businesses do not add the fee to prices or charge customers separately.
It is planning a system to monitor this.
Officials say only about 4% of UPI transaction volume will be affected.
The Finance Ministry also said the fee was not created because of pressure from the United States.
The government is discussing the new UPI Merchant Discount Rate with payment aggregators.
A 0.4% MDR will apply from October 15 to person-to-merchant UPI payments above Rs 2,000.
Merchants will pay the fee, capped at Rs 300 for transactions of Rs 75,000 or more.
The Finance Ministry is preparing monitoring measures to prevent merchants from passing the cost to customers.
The Department of Financial Services denied that the MDR was introduced under United States pressure.
- Who
- The central government, the Finance Ministry, payment aggregators, and other UPI ecosystem participants.
- What
- The government is working to prevent the new UPI Merchant Discount Rate from being passed on to customers.
- Where
- India’s Unified Payments Interface ecosystem.
- When
- Discussions were underway by September 18, 2026; the MDR takes effect on October 15, 2026.
- Why
- The MDR is intended to create a sustainable revenue framework for digital payments while limiting its effect on customers.
Government Position
Concerns And Allegations
Who should bear the fee?
Government Position
The government says merchants must pay the MDR and is preparing monitoring measures to stop them from passing it to customers.
Concerns And Allegations
Officials are concerned that merchants could recover the cost through higher prices or a separate charge for UPI payments.
Effect on consumers and UPI use
Government Position
The government expects limited effects because only about 4% of UPI transaction volume will be affected and does not expect a significant shift to cash.
Concerns And Allegations
Critics and stakeholders have raised concerns that the new charge could increase costs for people making large UPI payments.
Reason for introducing the MDR
Government Position
The Department of Financial Services says the MDR is intended to create a sustainable revenue framework and denies that it resulted from United States pressure.
Concerns And Allegations
Allegations and concerns followed a 2026 United States Trade Representative report about the inability of United States electronic payment providers to participate in UPI credit transactions on an equal footing with RuPay.
Key facts
- MDR rate
- 0.4% on applicable transactions
- Effective date
- October 15, 2026
- Transaction threshold
- Person-to-merchant UPI transactions above Rs 2,000
- Maximum fee
- Rs 300 for transactions of Rs 75,000 or more
- Expected affected volume
- Around 4% of total UPI transaction volume
- Customer liability
- The fee is intended to be paid by merchants, not customers
- Other payment option
- RuPay debit card transactions remain free regardless of transaction amount
Quotes
Department of Financial Services
The Finance Ministry department that rejected allegations of external pressure behind the UPI MDR
“The allegation that MDR has been introduced under any external influence is patently false and misleading”
news18.com
Sources
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