According to Moneycontrol, which cited senior government sources, the Indian government is considering the prospect of imposing merchant discount rate (MDR) charges on high-value Unified Payments Interface (UPI) transactions, although no decision has been taken as of yet.
The article claims that while the government is still adamantly in favor of digital payments, first talks have been held on charging MDR over a certain transaction level. “MDR costs above a certain amount, and there have been some conversations about it. However, a top source informed Moneycontrol that no decision has been made as of yet.
In order to facilitate digital payments, banks and payment service providers charge businesses a fee known as MDR. In order to encourage inexpensive digital adoption, the government now subsidizes the cost of UPI and RuPay transactions, which have 0% MDR. However, the long-term feasibility of this paradigm is now being examined, especially in the case of high-value transactions, due to the exponential development in digital payment volumes and values.
At the moment, UPI payments are free of merchant discount rates (MDRs), whereas credit card payments have MDRs of two to three percent.
The viability of the zero-MDR system has been questioned by banks and fintech businesses, who contend that in order to maintain and grow the digital payments infrastructure, operating expenses must be recovered.
According to figures from the National Payments Corporation of India (NPCI), UPI alone processed over 14 billion transactions in April 2025, totaling over Rs 20 lakh crore. This indicates that India’s digital economy has grown significantly in recent years. Service providers are now under more financial strain as a result of this extraordinary increase.
Government representatives acknowledged these worries but emphasized that every choice would be thoroughly thought out to balance the interests of banks, fintech businesses, retailers, and consumers. According to them, the objective is to maintain the affordability, sustainability, and inclusivity of India’s digital payment system.
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