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UPI to stay free for consumers and small merchants: Payments Council
The Payments Council of India has clarified that UPI will remain free for consumers and small merchants, a day after the Lok Sabha passed a Bill amending the Payment and Settlement Systems…
The Story in Brief
The Payments Council of India has clarified that UPI will remain free for consumers and small merchants, a day after the Lok Sabha passed a Bill amending the Payment and Settlement Systems Act, 2007. The amendment removes the legal bar on collecting Merchant Discount Rate (MDR) for notified electronic payments, enabling the government to authorise charges on certain transactions. Finance Minister Nirmala Sitharaman stated that MDR applies to merchants, not customers, and would help banks invest in security infrastructure.
According to sources, the government may permit an MDR of 0.25% to 0.4% on UPI transactions above Rs 2,000 made to businesses, while routine purchases like milk and vegetables are unlikely to be affected. Person-to-person payments and small merchants like kirana stores will remain exempt from any charges.
The Indian Opinion
The narrative that UPI will suddenly become costly for the common user is misleading, fuelled by headlines that skip the fine print. The bill merely allows the government to permit fees on large merchant transactions, not on person-to-person transfers or small kirana payments. The real issue is whether banks and fintechs, which have run UPI at a loss, can sustain the system without charging everyone someday. A concrete test to watch for is the final MDR slab the government notifies and whether it stays above the Rs 2,000 threshold.
Sources (2): timesofindia.indiatimes.com, ndtv.com
This story was synthesised by AI from the 2 sources linked above.
