Government may allow fees on UPI payment above Rs 2k
The Indian government is considering a merchant discount rate (MDR) of 0.25% to 0.4% on UPI transactions exceeding Rs 2,000. Officials state that this would only affect a small percentage of total transactions and would not impact daily small-value purchases.
Why it matters
Changes to UPI fee structures could impact the adoption of digital payments and the profitability of payment service providers in India.
NEW DELHI: Govt is likely to allow a levy of 0.25% to 0.4% as merchant discount rate (MDR) or charges on UPI payments above Rs 2,000 made to businesses, while keeping payments made by one person to another outside the ambit.The Taxation and Other Laws (Amendment) Bill, moved by FM Nirmala Sitharaman on Tuesday, has sought to remove the bar on banks and payment service providers to levy MDR on notified electronic payment modes. Govt officials said there is no decision on when the proposal will be implemented.Official estimates show that the Rs 2,000 floor will cover 5% of all UPI transactions, but those transactions account for 65% of the total transaction value, and is unlikely to impact daily purchases such as milk, vegetables and groceries or even payments for auto or taxi use.
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