UPI Transactions Above ₹3,000 May Attract Charges Soon
UPI Transactions Above ₹3,000 May Attract Charges Soon
If you frequently use UPI for your daily purchases and household needs, a major change may soon impact your expenses. The government is reportedly considering imposing a Merchant Discount Rate (MDR) on UPI transactions above ₹3,000, in a move aimed at supporting banks and payment service providers with increasing operational and technology costs.
According to officials, the volume of merchant transactions via UPI has grown significantly in recent years. Since the COVID-19 pandemic, UPI transaction value has surged to ₹60 lakh crore, covering nearly 80% of India’s digital retail transactions. However, since the introduction of the zero MDR policy in January 2020, the sector has struggled to attract private investment.
Payment companies and banks have raised concerns about the rising costs involved in processing large-value digital transactions. Without any revenue from MDR, service providers are unable to recover operational expenses, especially for high-value merchant payments.
The government is now reviewing a proposal to levy MDR on transactions above ₹3,000. If implemented, this could mean that consumers may have to pay an extra fee or merchants may bear the cost depending on how the policy is structured.
While smaller peer-to-peer UPI payments may remain free, the change could impact e-commerce payments, utility bills, and high-value retail purchases done through UPI.
Stakeholders in the fintech ecosystem are awaiting further clarity on the policy, which is expected to strike a balance between sustaining UPI’s growth and ensuring financial viability for service providers.
