Centre to ask banks’ body to ensure consumers don't pay MDR on UPI payments
The planned outreach by the Indian Banks’ Association aims to put the truth in the public domain and allay any misconceptions about the MDR.
The Indian government is planning to ask the Indian Banks’ Association (IBA) to launch awareness campaigns and establish a mechanism to prevent banks from passing on a proposed charge, known as Merchant Discount Rate (MDR), on specified Unified Payments Interface (UPI) transactions to consumers, according to senior finance ministry officials.
The initiative aims to clarify any misconceptions about MDR and its impact on consumers. From October 15, a 0.4% MDR will be imposed on person-to-merchant UPI transactions exceeding ₹2,000, with an upper limit of ₹300 for transactions of ₹75,000 or above. The MDR was reintroduced to ensure the financial sustainability of the UPI ecosystem and support necessary infrastructure, such as servers, cybersecurity, and customer support.
Around 96% of UPI transactions will remain unaffected by this fee, with person-to-person transactions and those below ₹2,000 exempt from the MDR. Only a flat MDR of ₹5 will be charged on UPI transactions above ₹2,000 in specific essential sectors like railways, telecom, insurance, fuel, and farm inputs. Finance ministry officials noted that the proposed MDR on these transactions might not be sufficient to cover the costs of running the UPI ecosystem.
The government is also engaging with traders’ bodies to dispel any fears and encourage them to continue accepting UPI payments.
Written by urgent.news from Live Mint's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
