‘Someone has to pay’: RBI governor on MDR proposal for UPI transactions above Rs 2k
The Indian government is considering a proposal to levy a Merchant Discount Rate (MDR) on UPI transactions exceeding Rs 2,000. RBI officials noted that while the policy is still under development, the costs of maintaining digital infrastructure must be borne by the economy.
Why it matters
UPI is the backbone of India's digital economy; introducing fees could significantly alter consumer behavior and merchant adoption.
Will you have to pay for UPI payments going ahead? The government is expected to permit the levy of a Merchant Discount Rate (MDR) of 0.25% to 0.4% on UPI transactions above Rs 2,000 made to businesses, while person-to-person (P2P) payments are likely to remain exempt.The Taxation and Other Laws (Amendment) Bill, introduced in Parliament on Tuesday by Finance Minister Nirmala Sitharaman, proposes removing the existing restriction that prevents banks and payment service providers from charging an MDR on notified electronic payment modes. Government officials said no decision has yet been taken on when the proposed changes would come into effect.So does this mean that if you pay for goods at the local merchant, you will bear an additional charge?RBI governor Sanjay Malhotra on Wednesday said that it is premature to comment on how the cost would come about.“It is very premature to talk right now.
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