Now Reading: Finance Ministry rules out consumer UPI charges amid MDR debate
-
01
Finance Ministry rules out consumer UPI charges amid MDR debate
The finance ministry has categorically ruled out any charges for consumers using UPI, clarifying that person-to-person transactions will remain free. The statement follows concerns raised after the government proposed amendments to the…
The Story in Brief
The finance ministry has categorically ruled out any charges for consumers using UPI, clarifying that person-to-person transactions will remain free. The statement follows concerns raised after the government proposed amendments to the Payment and Settlement Systems Act, 2007, through the Taxation and Other Laws (Amendment) Bill, 2026. The ministry said the amendment is an 'enabling provision' to allow a nominal merchant discount rate (MDR) on select merchant transactions above a threshold, aimed at long-term sustainability of the digital payments ecosystem.
The Payments Council of India and finance minister Nirmala Sitharaman have also confirmed that MDR will apply only to merchants, not end users. Small merchants like kirana stores will remain protected. Industry executives including PhonePe's Sameer Nigam and Razorpay's Harshil Mathur welcomed the clarity. Inc42 reports that the NPCI-led steering committee is yet to finalise the MDR framework.
The Indian Opinion
The zero-MDR regime has long been celebrated as a subsidy for digital adoption, but the real cost, borne by banks and fintechs, was always hidden. Now that the government wants a nominal charge on large merchants, predictable cries of 'tax on digital India' are missing the point. The question is not whether someone pays, but who. If big businesses pass the 0.25-0.4% MDR to consumers indirectly, trust in UPI could crack. Watch the fine print of the NPCI committee's final rules, it will tell us if this is a genuine sustainability fix or just a quiet shift of burden.
Source: inc42.com
This story was synthesised by AI from the source linked above.
