The Union finance ministry is implementing a monitoring system aimed at preventing the Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions exceeding ₹ 2000 from being transferred to consumers. This initiative seeks to ensure that the costs associated with these transactions do not impact the end-users, thereby promoting fair pricing in digital payments.
A 0.4 per cent MDR will apply to person-to-merchant UPI payments above ₹ 2,000 from October 15. MDR will be capped at ₹ 300 for transactions of ₹ 75,000 or more. The finance ministry on Thursday dismissed allegations that US pressure influenced the decision to levy a 0.4 per cent MDR on select UPI transactions, saying the latest NPCI guidelines do not give international credit cards any advantage over RuPay The ministry also asserted that it does not expect the levy to trigger a shift towards cash transactions. “The NPCI circular of September 15, 2026, does not allow credit transactions on UPI by any other credit card other than the RuPay credit card.
The ministry has already initiated discussions with payment aggregators and other stakeholders in the UPI ecosystem to sensitise them about the MDR and ensure that the burden is not passed on to consumers, according to sources quoted in a PTI report. The government says that the charge will be paid by merchants, not consumers. There is a clear policy of only allowing RuPay credit cards on UPI to enable RuPay credit cards to become the preferred choice of credit cards amongst users in India,” the DFS said in a post on X. “The allegation that MDR has been introduced under any external influence is patently false and misleading,” it added.
