Overview
- A scheduled UPI Steering Committee meeting on Oct. 9 did not take place and the National Payments Corporation of India has not confirmed the planned Oct. 15 start for a merchant discount rate.
- The proposed MDR would charge merchants 0.4% on person-to-merchant UPI payments above ₹2,000 with a maximum fee of ₹300 while transactions up to ₹2,000 and person-to-person payments remain free.
- Merchant groups including the Kerala Textile & Garments Association say the fee will squeeze low-margin traders, could push sales back to cash, and asked for a delay or public funding to avoid higher consumer prices.
- Industry and academic voices offer alternatives and tweaks: some fintech leaders call for shared cost-bearing across banks and apps, and an IIT Bombay report recommends narrowing the fee to larger merchants and excluding loan repayments.
- The dispute exposes a wider shift from an adoption-first, zero-fee UPI model to one that must fund ongoing infrastructure, security and resilience and could reshape how digital payments are paid for in India.