Finance Ministry Dismisses Claims Of MDR On UPI Transactions

The clarification follows reports by certain media outlets claiming that the centre is considering reintroducing MDR charges on UPI payments exceeding Rs 3,000

Despite industry concerns, UPI adoption continues to surge

Source : X.com

The Finance Ministry on Wednesday issued a strong denial of recent media speculation suggesting that the government is planning to impose a Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions.

In an official post on X, the Ministry called the reports “false, baseless, and misleading,” adding that such claims only serve to create unnecessary confusion. “Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading. Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens,” the Ministry stated. 

“The Government remains fully committed to promoting digital payments via UPI,” it added.

Media Reports Suggested Charges for High-Value Transactions

The clarification follows reports by certain media outlets claiming that the centre is considering reintroducing MDR charges on UPI payments exceeding Rs 3,000. These reports suggested that discussions were ongoing to permit MDR based on individual transaction values instead of total merchant turnover, with the aim of supporting banks and payment service providers.

Industry Concerns Over Zero MDR Policy

Earlier this year, the Payments Council of India (PCI), a key industry body representing more than 180 non-banking payment entities, had written to the government, seeking a reassessment of the Zero MDR policy implemented in January 2020. The PCI’s letter underscored the financial strain on payment service providers, stating that the government’s Rs 1,500 crore incentive falls significantly short of the estimated Rs 10,000 crore needed annually to sustain and expand UPI infrastructure.

The council proposed a nominal MDR of 0.3 per cent for large merchants using UPI and a similar approach for RuPay debit card transactions across all merchant categories.

UPI Continues To Break Records

Despite industry concerns, UPI adoption continues to surge. January 2025 saw a record-breaking 16.99 billion UPI transactions, with the value crossing Rs 23.48 lakh crore, the highest monthly figures to date. According to official data, UPI accounted for nearly 80 per cent of retail digital payments in FY 2023–24, with more than 131 billion transactions totaling over Rs 200 lakh crore.