Overview
- The government has finalised a Merchant Discount Rate of 0.4% on person‑to‑merchant UPI payments above ₹2,000 with a cap of ₹300 and said the levy should be borne by merchants.
- Officials clarified the charge will not apply to person‑to‑person transfers or to automated recurring UPI mandates such as utility bills, subscriptions, and SIPs.
- Bankers and market analysts disagree on whether merchants will absorb the fee or pass it to customers, with SBI Research using NPCI data warning that full pass‑through could add about ₹2,133 crore a year to Madhya Pradesh consumers.
- Political leaders are divided: Jammu and Kashmir CM Omar Abdullah supported the fee while urging no pass‑through, Odisha leader Naveen Patnaik urged protection for small traders, and opposition claims of foreign pressure were denied by the finance ministry.
- The framework is scheduled to take effect on October 15, 2026, prompting banks, merchants and payment firms to prepare systems and pricing ahead of the start date.