UPI Transactions May Incur Charges – Digital Payment Users Brace for a Shock

New Delhi (The Uttam Hindu): The government is considering reintroducing merchant charges on transactions made through Unified Payments Interface (UPI) and RuPay debit cards. This means that using UPI may no longer remain free, and users could be required to pay additional charges for digital payments.

Merchant Discount Rate (MDR) Under Review

The government is evaluating the reimplementation of the **Merchant Discount Rate (MDR)** on UPI and RuPay transactions. MDR is a fee that merchants or shopkeepers pay for enabling digital payment services. This charge was waived in 2022, but discussions are now underway to bring it back.

Currently, UPI and RuPay debit card transactions, processed through the **National Payments Corporation of India (NPCI)**, do not attract any MDR. However, the banking industry has reportedly submitted a formal request to the central government to reintroduce MDR for large merchants. The proposal is now under review by the relevant departments.

Who Will Be Affected?

As per the proposal, MDR could be reintroduced for merchants with an **annual turnover exceeding ₹40 lakh**, based on their GST filings. A **tiered pricing model** for UPI transactions is also being considered, where:

- **Large merchants** will be subject to higher charges.

- **Small businesses** with an annual turnover of less than ₹40 lakh will continue to enjoy free UPI transactions.

UPI Transaction Volume

Data from NPCI indicates that **UPI recorded 16.11 billion transactions in February 2025**, amounting to approximately **₹22 trillion**. This was slightly lower than January 2025, which saw **16.99 billion transactions**.

If implemented, this move could significantly impact digital payments, particularly for large-scale businesses.