New Delhi, August 5(APAC Media): The government is considering bringing back charges on some UPI payments made to large businesses. No final decision has been taken yet, but changes proposed to the Payment and Settlement Systems Act could allow the government to introduce a Merchant Discount Rate (MDR) on selected UPI transactions.
Who Could Be Affected?
The proposal is mainly aimed at large merchants, not everyday users. According to reports, the government is looking at charging an MDR of 0.3% to 0.5% on UPI payments above ₹2,000 made to businesses with an annual turnover of more than ₹1.5 crore. Another option being discussed is to charge fees only on transactions above a certain amount.
Consumers and small businesses are expected to continue using UPI without any charges if the proposal goes ahead.
Why Is The Government Considering This?
Payment companies have been asking for a fee on UPI transactions for several years. They say running and expanding digital payment services costs money, and the current zero-fee system makes it difficult to invest in better technology and infrastructure.
UPI handled 23.6 billion transactions worth ₹29.9 lakh crore in July, showing how widely it is used across India. According to a Jefferies report, charging MDR only on high-value payments to large merchants could generate ₹50,000 crore to ₹1 lakh crore in revenue for the digital payments industry. Companies such as Paytm and Pine Labs could benefit if the proposal is approved.
For now, UPI payments remain free, and the government has not announced any final decision on when or whether the new charges will be introduced.
