Paytm founder and CEO Vijay Shekhar Sharma has welcomed provisions to charge larger UPI payments, calling it a "Robin Hood" approach that will help keep the platform free for ordinary users and small merchants.
Sharma said UPI had largely operated on a grant-based model until now, with the state effectively subsidising the platform's costs.
.@Paytm Founder and CEO Vijay Shekhar Sharma said UPI had largely operated on a grant-based model. He welcomed the provision to charge larger payments, with the revenue helping keep UPI free for common users and small merchants.
Calling it a “Robin Hood” approach, Sharma said… pic.twitter.com/WTGQjqZ8ZDAlso Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
— DD News (@DDNewslive) September 16, 2026
The National Payments Corporation of India has set a 0.4% MDR on person-to-merchant UPI transactions above Rs 2,000 from October 15.
Speaking to DD News, Sharma said the provision to levy charges on bigger transactions reversed that logic in the merchants' favour, calling it a move that "protects small merchants" while creating a sustainable funding base for the system.
"It's a long-pending issue that everyone knew would eventually see some charge come in," Sharma said, adding that he was glad the government had fully safeguarded the interests of small shopkeepers in doing so.
According to Sharma, every other payment mechanism used at shops or online already attracted charges, while UPI alone had remained exempt.
He said that bringing larger payments under a charge structure, while keeping small transactions free, would help build both a long-term sustainable and a long-term viable model for UPI going forward.
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Meanwhile, the Finance Ministry clarified that the new UPI framework introduced has no impact on any person to person transactions.
"UPI will continue to remain completely free for all person-to-person transactions, irrespective of the amount transferred. Payments to merchants up to Rs 2,000, along with transactions covered under the zero-MDR framework for small merchants, will also remain free. Consequently, approximately 96% of all P2M transactions will remain unaffected. MDR will apply only to specified merchant transactions above Rs 2,000."
It is clarified that MDR is neither a tax nor a charge collected by the Government or NPCI.
The Reserve Bank said on Tuesday said that the introduction of Merchant Discount Rate (MDR) on large-value UPI transactions is an important step towards strengthening the long-term sustainability of India's digital payments ecosystem.
"It will help UPI in continuing to scale, innovate and serve consumers and businesses across the country," the Reserve Bank of India (RBI) said in a post on X.
ALSO READ: Transferring Over Rs 2,000 Via UPI? No Levy On Peer-To-Peer Transaction, Govt Clarifies
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