Why charging for UPI changes the math
The Indian government is introducing a 0.4% Merchant Discount Rate on UPI transactions over ₹2,000, marking a shift from the previous zero-fee model. The article explores the balance between maintaining the digital infrastructure and the broader economic benefits of the system.
Why it matters
As digital payment systems become essential economic infrastructure, the debate over how to fund their maintenance while encouraging adoption is a critical policy challenge.
I n the decade since its launch, India’s Unified Payments Interface (UPI) has evolved from a promising digital experiment into critical economic infrastructure. Against this backdrop, the Union Finance Ministry has notified that the National Payments Corporation of India (NPCI) will operationalise a 0.4% Merchant Discount Rate (MDR) on specified merchant transactions above ₹2,000 from October 15. While consumers will not be charged directly , this marks a significant departure from UPI’s zero-MDR model for merchants. While the reasoning is understandable, considering the costs to run UPI, one question deserves an answer: what has UPI cost India , and what has it saved?
Editorial | Complex priorities: On UPI transactions, MDR charges
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