'To strengthen UPI's sustainability': RBI backs 0.4% MDR on payments above Rs 2,000
The Reserve Bank of India has approved a 0.4% Merchant Discount Rate on UPI transactions exceeding Rs 2,000 to ensure the long-term sustainability of the digital payment system. The government clarified that this fee is strictly for merchants and will not be passed on to individual consumers.
Why it matters
This policy shift marks a significant change in India's digital payment landscape, balancing the need for platform sustainability with the goal of maintaining free access for retail users.
NEW DELHI: The Reserve Bank of India has backed the introduction of a Merchant Discount Rate (MDR) on large-value UPI transactions, saying the move would help strengthen the long-term sustainability of India’s digital payments ecosystem.The National Payments Corporation of India (NPCI) has notified an MDR of 0.4% on person-to-merchant (P2M) UPI transactions above Rs 2,000, with the new charges set to take effect from October 15, 2026. Person-to-person (P2P) UPI transactions will continue to remain free.The RBI said the move would help UPI “continue to scale, innovate and serve consumers and businesses across the country”.“It will help UPI in continuing to scale, innovate and serve consumers and businesses across the country,” the RBI said in a post on X on Tuesday.No UPI charges for customersThe government has clarified that the new MDR is a charge within the merchant payment ecosystem and will not be directly imposed on customers.“Customers will not…
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