UPI Payment : There is a possibility of a big change in UPI transactions. The government is considering imposing MDR charges on digital payments above Rs 3000, which could directly impact the pockets of merchants.
The government is considering imposing MDR (Merchant Discount Rate) on UPI transactions of Rs 3,000 or more. According to a report by NDTV Profit, this charge will be levied only on large transactions and no charges will be levied on small transactions. Currently, the zero MDR policy is applicable on UPI transactions. This means that no charges are levied from merchants.
What is MDR?
MDR stands for Merchant Discount Rate. When a customer makes a payment through digital means (e.g. UPI, card payment), banks or payment service providers charge a fixed fee from the merchant. This fee is called MDR. Currently, no fee is charged from merchants as Zero MDR is applicable on UPI transactions.
What can change?
According to the new proposal, banks or payment service providers will be able to collect MDR charges from merchants if the UPI transactions exceed Rs 3,000. This charge will be based on the amount of each transaction, not on the merchant’s total turnover.
This will not affect small shopkeepers and transactions of less than Rs 3,000. It is unlikely that the charges will be levied directly on the customers. However, the charges may be levied on the merchants.
Demand for removal of Zero MDR
The Payment Council of India had earlier recommended the removal of the Zero MDR policy. They say that the Zero MDR policy does not generate sufficient revenue for banks and payment providers, thus jeopardizing the sustainability of the digital payment system.
UPI is becoming a global giant
According to the data available till June 2025, an average of 650 million (65 crore) UPI transactions are taking place in India every day.
- On June 1, 2025: 644 million transactions
- On June 2, 2025: 650 million transactions
These figures show that UPI is now on the verge of surpassing global payment networks like Visa in daily transactions. Visa’s estimated daily transactions (FY24): 639 million transactions (Verified official figures are not available, this is an estimate.)
