UPI MDR Will Not Push Users Back To Cash, Says RBI Deputy Governor SC Murmu
The introduction of Merchant Discount Rate (MDR) on certain Unified Payments Interface (UPI) transactions is unlikely to drive consumers back towards cash, Reserve Bank of India Deputy Governor S C Murmu said. He added that the new framework would help the digital payments ecosystem recover operational costs while supporting future growth. Speaking at an event organised by the Bengal Chamber of…
Reserve Bank of India Deputy Governor S C Murmu stated that a new Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions above ₹2,000 will not push users back to cash. Speaking at an event in Kolkata, Murmu dismissed worries that the MDR could lead to increased reliance on cash. The MDR, introduced by the National Payments Corporation of India (NPCI), aims to strengthen the UPI ecosystem while recovering operational costs.
Transactions between individuals, including family and friends, will remain free. Merchants will pay the fee, but businesses are concerned it may be passed on to customers, affecting payment preferences. However, the RBI emphasized that fair distribution of MDR would support investment in technology, infrastructure, and payment networks, enabling UPI to continue scaling and innovating.
Murmu also noted that cash remains relevant, especially among rural communities, small businesses, older populations, and low-income groups, despite the growth of digital payments. As of August 2026, cash in circulation was ₹42.86 trillion, up from ₹41.66 trillion in FY26, while UPI transactions grew by 22.5% year-on-year in August.
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