Centre mulls 0.25-0.35% fee on high-value UPI payments

The Indian government is considering the reintroduction of a merchant discount rate (MDR) on Unified Payments Interface (UPI) transactions exceeding Rs 2,000. The proposed fee, ranging from 0.25% to 0.35%, would apply to high-value payments made to large merchants. This move aims to streamline the digital payment ecosystem while ensuring that the operational costs of maintaining the UPI infrastructure are adequately met. The decision to potentially reinstate the MDR comes after careful consideration of the rapid growth in UPI transactions, which have become a cornerstone of India's digital economy. By targeting only high-value transactions for larger businesses, the government seeks to balance the interests of various stakeholders. This approach is designed to maintain the momentum of digital adoption among small merchants and consumers, who will remain unaffected by the proposed charges. Industry experts believe that reintroducing the MDR could encourage banks and payment service providers to enhance their services, given the potential for additional revenue. However, some stakeholders express concerns about the possible impact on transaction volumes among larger merchants. As discussions continue, the government aims to ensure that any decision made will support the sustainable growth of digital payments in the country.

— Authored by Next24 Live