Archive · 24 Sep 2026
Finance Ministry Moves to Address UPI MDR Consumer Concerns
The government is concerned that people may be charged extra when they pay through UPI.
It plans to speak with banks and traders about this issue.
Banks will explain how the merchant discount rate, or MDR, works.
Customers are not supposed to pay this charge.
Banks will also tell shops not to add the charge to customers’ bills.
Sources said the MDR is 0.4 percent for UPI payments above Rs 2,000.
The government may create a way to check whether shops are following the rule.
The GST Council may separately decide whether GST applies to MDR.
The Finance Ministry will meet the Indian Banks’ Association and traders over concerns about UPI merchant discount rates.
The Indian Banks’ Association will run campaigns explaining that customers are not required to pay UPI MDR.
Banks have been advised to prevent merchants from passing MDR charges on to consumers.
Sources said MDR on UPI transactions above Rs 2,000 is 0.4 percent and that the government may monitor compliance.
The GST Council may consider whether GST applies to MDR; sources said no MDR revenue goes to the Government of India.
- Who
- The Finance Ministry, the Indian Banks’ Association, banks, traders and the GST Council.
- What
- Officials will discuss UPI MDR concerns and measures to ensure merchants do not pass the charge to consumers.
- When
- The discussions are expected to take place Thursday and in subsequent meetings; the articles do not give a specific meeting date.
- Where
- India.
- Why
- To address misconceptions about MDR and prevent merchants from charging the fee to customers.
- MDR rate cited
- 0.4 percent on UPI transactions above Rs 2,000, according to sources.
- Customer liability
- Customers are not supposed to pay the MDR charge.
- Planned communication
- The Indian Banks’ Association will run advertising campaigns explaining UPI MDR.
- Compliance measures
- Banks have been advised to ensure merchants do not pass MDR on to consumers.
- Possible monitoring
- The government may discuss a mechanism to monitor whether merchants pass on the charge.
- Government revenue
- Sources said no MDR collected will go to the Government of India.
- GST decision
- The GST Council is likely to consider whether GST applies to MDR.
