National: UPI Fees for Over Rs. 3,000 Transactions Eyed
Government Reconsiders MDR Exemption
The Indian government is evaluating the reintroduction of a Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions exceeding Rs 3,000, according to reliable sources. Discussions are underway among the Prime Minister’s Office, the Department of Financial Services, and the Ministry of Finance.
Shift from Zero-MDR Policy
Since January 2020, UPI transactions have been exempt from MDR to promote digital payments. The proposed reintroduction aims to offset operational costs for banks and payment service providers amid surging transaction volumes.
Focus on High-Value Transactions
The proposed MDR, potentially ranging from 0.2% to 0.3%, would target high-value merchant transactions, sparing smaller payments. This ensures continued accessibility for small businesses while addressing revenue concerns for larger entities.
Industry Push for Sustainability
The Payments Council of India has advocated for a 0.3% MDR on large merchants to sustain and scale UPI infrastructure. Banks and fintech firms argue that free transactions are unsustainable long-term due to high operational costs.
UPI’s Dominance in Digital Payments
Developed by the National Payments Corporation of India (NPCI), UPI processed transactions worth Rs 24.77 lakh crore in March 2025 alone. The zero-MDR policy has driven widespread adoption, particularly among small merchants.
Potential Market Impact
The proposed fees, tied to transaction value rather than merchant turnover, could reshape cost structures for large retailers. News of the proposal has already caused market volatility, impacting stocks of firms like Paytm.
Ongoing Policy Deliberations
Stakeholders await clarity on the MDR’s scope and structure as discussions continue. The final framework could significantly influence India’s digital commerce landscape, balancing accessibility and financial viability.