Overview
- Parliament removed the statutory ban on charging certain digital payments in August, and the Finance Ministry on Monday formally protected UPI transactions up to ₹2,000 and payments made with RuPay debit cards from any bank or system provider charges.
- The National Payments Corporation of India and the UPI Steering Committee on Tuesday detailed a 0.4% Merchant Discount Rate for person-to-merchant payments above ₹2,000, with a maximum charge of ₹300 for transactions of ₹75,000 or more and an October 15, 2026 start date.
- Person-to-person UPI transfers remain free and small merchants using QR codes who receive up to ₹1 lakh a month are exempt from MDR under the P2PM rules, and the framework bans platform fees on users.
- Officials and NPCI say the fee will pay for server infrastructure, bandwidth, fraud prevention and cybersecurity, and industry estimates suggest a 0.4% MDR could generate thousands of crores a year to be shared among banks, apps and the network.
- Opposition leaders denounced the move as a burden on traders and warned merchants may pass costs to consumers, and critics have tied the policy shift to foreign payments firms’ long-standing complaints about India’s zero-MDR regime, making implementation and pass-through the key issues to watch.