New Delhi, September 15 (TNA) Merchant transactions above ₹2,000 made through the Unified Payments Interface (UPI) may soon attract a 0.4% Merchant Discount Rate (MDR), according to reports. The proposed charge would apply to merchants rather than ordinary users, and the final framework is yet to be notified.
The proposal follows the Finance Ministry’s notification that banks and payment system providers cannot impose direct or indirect charges on UPI transactions of up to ₹2,000 or on payments made through RuPay-powered debit cards.
How the Proposed Charge Works
At 0.4%, a merchant transaction of ₹5,000 would attract a fee of ₹20, while a ₹10,000 payment would carry a charge of ₹40. A transaction of ₹50,000 would result in a fee of ₹200 under the proposed rate.
The Merchant Discount Rate is a processing fee paid by a merchant to banks and other participants in the digital-payment ecosystem. The proposed framework is intended to apply only to selected merchant transactions above the ₹2,000 threshold, not to person-to-person transfers.
No Immediate Charge Yet
The government notification does not itself introduce a 0.4% charge or prescribe any MDR for UPI payments above ₹2,000. The rate is reportedly under discussion among banks, NPCI and other stakeholders, and the final amount and distribution of the fee have not been decided.
Consumers are therefore not expected to face a blanket fee for making UPI payments. Any future MDR would be aimed at specified merchant transactions, while person-to-person UPI payments are expected to remain free.