No Charges On UPI Payments: Finance Ministry Reaffirms Digital Payments To Remain Free

The Finance Ministry on Wednesday has clarified that the government is not considering reintroducing merchant discount rate on Unified Payments Interface transactions, stating that UPI will remain a low-cost and accessible platform to promote digital payments across India.

The clarification followed an NDTV Profit report that the government was reviewing the zero-MDR regime for large-value UPI payments, specifically those exceeding Rs 3,000. A proposal to allow MDR on high-ticket UPI transactions is under discussion to help make the ecosystem financially viable for banks and service providers, NDTV Profit reported earlier on Wednesday quoting people familiar with the matter.

A senior official had said the Prime Minister's Office, Department of Economic Affairs, and Department of Financial Services held a meeting last week to examine a possible policy change.

Sources had told NDTV Profit that the government plans to keep small-value transactions exempt from any MDR.

Industry stakeholders argue that a nominal MDR on high-value UPI payments could help offset rising infrastructure and operational costs. UPI accounts for nearly 80% of all retail digital transactions, with person-to-merchant payments crossing Rs 60 lakh crore since 2020.

The Payments Council of India has proposed a 0.3% MDR for large merchants, significantly lower than the 0.9%–2% rate typically charged on most debit and credit card transactions, excluding RuPay. Sources said RuPay credit cards would likely remain exempt from any proposed MDR.

For now, all UPI transactions remain free of merchant charges. The broader discussion on balancing digital payment accessibility with long-term financial viability remains ongoing.