Now Reading: UPI merchant payments above Rs 2,000 to attract 0.4% MDR from Oct 15
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UPI merchant payments above Rs 2,000 to attract 0.4% MDR from Oct 15
The government has introduced a 0.4% Merchant Discount Rate (MDR) on UPI person-to-merchant transactions above Rs 2,000, effective October 15, ending the zero-MDR regime that began in January 2020. The fee is…
The government has introduced a 0.4% Merchant Discount Rate (MDR) on UPI person-to-merchant transactions above Rs 2,000, effective October 15, ending the zero-MDR regime that began in January 2020. The fee is capped at Rs 300 for transactions of Rs 75,000 and above. Essential sectors such as railways, telecom, and fuel will pay a flat Rs 5 per transaction, while capital market payments attract a 0.02% MDR.
Person-to-person transfers and all transactions up to Rs 2,000 remain free, covering about 96% of P2M volume, according to the Finance Ministry. Small merchants receiving up to Rs 1 lakh monthly via UPI QR codes are fully exempt. The MDR is distributed among banks, payment service providers, and app providers. A dedicated fund, fed by 5% of MDR collections, will support UPI expansion among small merchants.
The Congress party has criticised the move as a 'Modi Tax,' with Rahul Gandhi alleging the government is 'surrendering to American pressure.' Congress leaders accused the government of a policy flip-flop, citing the Finance Minister's earlier statements that no decision on MDR had been taken. The government maintains that MDR is not a charge on consumers and has barred app providers from levying platform fees and banks from allowing merchants to pass on costs.
Indian Opinion Analysis
The coverage splits along predictable lines. Government-friendly sources, including Telangana Today and the Finance Ministry's explainer, frame the MDR as a necessary ecosystem charge that leaves 96% of transactions untouched and protects consumers. Livemint provides a detailed neutral explanation of the framework. In contrast, Rediff and The Federal give prominent space to the Congress's 'Modi Tax' charge and allegations of US pressure, without disputing the factual details. The opposition's claim that costs will be passed to consumers is a logical possibility the government's bar on pass-through cannot fully guarantee, making merchant compliance the key factor to watch after October 15.
Coverage: 8 sources, 1 pro-government, 2 government-critical, 5 neutral
Sources (8): livemint.com (neutral report), livemint.com (2) (neutral report), rediff.com (neutral report), rediff.com (2) (government critical), rediff.com (3) (neutral report), rediff.com (4) (neutral report), thefederal.com (government critical), telanganatoday.com (pro government)
This brief was synthesised by AI from the 8 sources linked above, so one read covers every framing they carry.
Updated: this story now draws on 8 sources.
