UPI MDR: What is being proposed, and who pays the final cost? Explained
The Indian government is considering the introduction of a Merchant Discount Rate (MDR) for UPI transactions, though it has clarified that consumer-facing payments will remain free. The proposed fee would only apply to specific merchant categories above a certain transaction threshold.
Why it matters
Explains potential changes to India's widely used digital payment infrastructure and clarifies the economic impact on consumers and businesses.
Unified Payments Interface or UPI transactions have become an important backbone of the digital payments economy in India. With wide adoption and transactions running into several lakh crore every month, UPI is an important payments enabler for the common man, small and big businesses.But the service which has remained free so far, may in the coming days see the imposition of a Merchant Discount Rate or MDR. Does that mean that people will have to pay a fee for UPI transactions? No.The government has clarified that UPI will continue to remain free for consumers and no transaction charges will be applicable to person-to-person payments.
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