UPI Payments Above Rs 2,000 May Face Merchant Fee
The Central Government is reportedly evaluating a proposal to introduce a merchant discount rate (MDR) on certain UPI transactions. If approved, the new rule would apply only to merchant payments exceeding Rs 2,000, while person-to-person transfers would continue to remain free.
The proposal is currently under consideration, and authorities have not yet announced any final decision or implementation date.
What Is Being Proposed?
According to reports, the government is examining the possibility of levying a merchant fee ranging between 0.25% and 0.40% on UPI payments above Rs 2,000 made at shops, retail outlets, and business establishments.
The proposed charge would be borne by merchants rather than customers. However, businesses could choose to adjust product prices to offset the additional transaction cost.
Will Customers Have to Pay?
As of now, customers will not be directly charged under the proposal. Payments made through UPI to friends, family members, or other individuals are expected to remain completely free, even if the proposal is implemented.
The suggested fee would only apply to eligible merchant transactions that cross the specified payment limit.
Why Is the Government Considering This?
The government removed MDR on UPI transactions in 2020 to promote digital payments across the country. Since then, UPI has become India's preferred digital payment platform, handling billions of transactions every month.
Banks and digital payment service providers have repeatedly urged the government to reconsider the policy. They argue that maintaining payment infrastructure, strengthening cybersecurity, and preventing online fraud involve significant operational costs.
According to industry stakeholders, introducing a modest merchant fee could help support the long-term sustainability of the digital payments ecosystem.
No Final Decision Yet
Officials are expected to hold discussions with banks, payment companies, and other stakeholders before making any policy announcement.
Until an official notification is issued, there is no change in the existing system. All UPI transactions continue to remain free under the current rules.
Consumers and merchants are advised to rely only on official announcements, as the proposal is still under review and has not been approved.
