Now Reading: UPI stays free for users, nominal merchant fee likely above Rs 2,000
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UPI stays free for users, nominal merchant fee likely above Rs 2,000
The government has clarified that UPI will remain free for all person-to-person transactions and for most merchants. A nominal Merchant Discount Rate (MDR) of 0.25% to 0.4% may be introduced only for…
The Story in Brief
The government has clarified that UPI will remain free for all person-to-person transactions and for most merchants. A nominal Merchant Discount Rate (MDR) of 0.25% to 0.4% may be introduced only for certain merchant transactions above Rs 2,000, with a ceiling on the charge.
The clarification follows the Lok Sabha's passage of the Taxation and Other Laws (Amendment) Bill, 2026, which amended the Payment and Settlement Systems Act. The finance ministry says the move is needed to sustain investment in cybersecurity and infrastructure as UPI expands. The NPCI-headed UPI and Services Steering Committee will decide on the final MDR, if any. Congress leader Jairam Ramesh has questioned whether merchants will pass the cost to consumers.
The Indian Opinion
The government insists external pressure from Visa and Mastercard played no role, but the timing invites suspicion. UPI's free model is a public good that boosted financial inclusion. Touting sustainability is fair, but the test will be how the threshold and rate are set. Will small merchants be truly exempt, and will the ceiling prevent a slow creep of charges? The answer lies in the fine print of the NPCI committee's decision.
Sources (2): timesofindia.indiatimes.com, english.mathrubhumi.com
This story was synthesised by AI from the 2 sources linked above.
