‘Someone has to pay’: RBI governor on MDR proposal for UPI transactions above Rs 2k
According to official estimates, the Rs 2,000 threshold would cover only around 5% of all UPI transactions, although these account for nearly 65% of the total value processed on the platform. As a result, routine purchases such as milk, vegetables, groceries, or payments for auto-rickshaws and taxis are unlikely to be affected. UPI processed 23.7 billion transactions worth Rs 29.9 lakh crore in…
The government is considering imposing a Merchant Discount Rate (MDR) of 0.25% to 0.4% on UPI transactions exceeding Rs 2,000 made to businesses, while person-to-person payments remain exempt. Finance Minister Nirmala Sitharaman introduced the Taxation and Other Laws (Amendment) Bill in Parliament, removing the existing restriction preventing banks and payment service providers from charging MDR on notified electronic payment modes.
RBI Governor Sanjay Malhotra stated that it is too early to comment on how the cost would be borne. He emphasized that ultimately, the consumer bears some portion of the cost, which may not be directly apparent. The Rs 2,000 threshold would cover approximately 5% of all UPI transactions, with the remaining 95% not affected. Industry executives suggested that the government might set an upper limit on the maximum MDR that can be charged, as there is no funding cost involved in debit and credit card transactions.
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