UPI Payment Update:
Important news for digital payment users — the government is planning to introduce MDR (Merchant Discount Rate) on UPI transactions of ₹3,000 or more. So far, both customers and merchants have been able to use UPI services without any charges.
UPI Payment Update:
There’s a significant update for digital payment users — the government is now considering levying a charge on UPI transactions of ₹3,000 and above. This charge would come in the form of MDR (Merchant Discount Rate). Until now, under the Zero MDR Policy, neither customers nor merchants were required to pay any fee for UPI transactions. However, this system may soon change for payments exceeding ₹3,000.
What is MDR Fee?
MDR, or Merchant Discount Rate, is a fee that banks or payment app providers charge merchants when customers make payments via UPI. The government is currently considering applying this fee only to transactions exceeding ₹3,000. This means that regular users making small day-to-day payments through UPI—like buying vegetables, groceries, milk, or ordering food online—will remain unaffected.
Why is the government considering imposing MDR?
The purpose of this proposal is to provide a permanent source of income to banks and UPI payment companies so that they can run this service for a long time without any loss. The Payment Council of India has already recommended the government to end the Zero MDR policy. The need for this change is also being felt because the use of UPI is increasing tremendously in India.
On June 1, 2025, there were 644 million (64.4 crore) UPI transactions.
On June 2, 2025, this figure reached 650 million (65 crores).
These figures indicate that UPI is now set to overtake international payment companies such as Visa. For example, Visa’s average daily transaction is estimated to be around 639 million. In May 2025, there were more than 14 billion (1,400 crore) UPI transactions in India, with a total value of more than Rs 20 lakh crore.
The government says that if a small MDR is charged on large transactions, then the digital payment system can be strengthened further and banks will be helped in its operation. At present, this proposal is in initial discussions, and before implementing it, the government will talk to traders and payment companies. But it is certain that small payments through UPI will remain free for common people as before.
