New Delhi, Sept 15: The Union Government introduced a 0.4 percent fee on Unified Payments Interface (UPI) merchant transactions exceeding ₹2,000, capping the maximum charge per transaction at ₹300. Official communications indicate that the policy revision brings an end to the zero-Merchant Discount Rate (MDR) regime operational since January 2020.
Financial regulatory authorities maintained that while the previous tax-funded zero-MDR policy significantly boosted digital payment adoption across small merchants and retail networks, banking institutions and fintech companies consistently raised concerns regarding its long-term financial sustainability. The fee structure applies specifically to commercial merchant transactions and does not impact regular peer-to-peer money transfers.
Industry representatives affirmed that the revised charge framework will help banks and payment system operators cover essential infrastructure costs and maintain high-volume digital processing networks. Officials declared that small-value digital transactions under ₹2,000 will remain completely exempt from charges to protect everyday consumer spending and small-scale business activity.
