Overview
- NPCI issued the new Merchant Discount Rate framework on September 15 that charges merchants 0.4% on person‑to‑merchant UPI transactions above Rs 2,000, with a Rs 300 cap and special flat Rs 5 rules for some essential services.
- The fee will take effect on October 15 and the finance ministry and NPCI say revenue will be shared among banks, payment service providers and app firms to pay for servers, fraud prevention and wider acceptance.
- The framework preserves free person‑to‑person transfers, exempts merchants with up to Rs 1 lakh monthly UPI QR receipts, and keeps most daily purchases below Rs 2,000 outside the charge.
- Opposition parties have protested and alleged foreign influence while the government has publicly rejected those claims and said it will monitor aggregators to stop merchants from passing fees to consumers.
- The move ends the zero‑MDR era started in 2020 to boost cashless payments and is meant to create a self‑sustaining model, but officials and analysts warn enforcement, bill‑splitting and possible price pass‑through are key risks to watch.