UPI Transactions Over ₹3,000 to Face Charges? Here’s What We Know

As UPI (Unified Payments Interface) continues to dominate digital transactions across India, reports suggest that the central government is considering imposing Merchant Discount Rate (MDR) charges on high-value UPI transactions to address rising operational costs for banks and payment service providers.

Rising Costs Prompt Move Towards MDR on UPI

Currently, UPI transactions do not attract any charges, making it a highly preferred mode of payment among consumers and merchants. However, banks and payment service providers have expressed concerns over the increasing costs associated with managing the growing volume of digital payments.

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In response, the government is reportedly discussing the possibility of implementing MDR charges based on transaction value, rather than the merchant’s annual income. If approved, UPI transactions above ₹3,000 may soon attract MDR charges.

End of Zero MDR Policy?

If these proposed charges come into effect, it would effectively mark an end to the Zero MDR policy that was introduced in January 2020. Under the current system, both merchants and customers enjoy zero transaction fees for UPI payments.

However, reports suggest that smaller transactions may continue to remain free of MDR, protecting small merchants and day-to-day UPI users from additional costs.

Decision Expected in Next Two Months

The government is expected to finalize its decision on UPI charges after further consultations with banks, financial institutions, and the National Payments Corporation of India (NPCI). According to sources, a final decision may be made within the next two months.

No MDR on RuPay Cards Likely

While discussions continue for UPI transactions, reports indicate that RuPay card transactions may continue to remain free from MDR charges, providing some relief to cardholders.

Possible Impact on Users

At present, there is no clear indication of whether these MDR charges will directly impact everyday users. Since MDR is typically levied on merchants, consumers may not feel the effect directly. However, larger businesses handling high-value UPI transactions may have to absorb or pass on these costs.

As of now, the Payments Council of India has proposed an MDR charge of 0.3% for larger merchants on high-value transactions. For comparison, MDR on debit and credit card transactions currently stands at around 2%.