Customers will not be charged 0.4 percent merchant discount rate (MDR) on UPI transactions above Rs 2,000. Banks will run awareness campaigns to remove misconceptions in this regard. This information has come to light quoting official sources. Sources also said that the government will not get a single penny from the MDR levied on UPI transactions. The amount received from MDR will be given to various parties including banks in the UPI related system.
Consideration of imposing GST
The source expressed hope that the GST Council will consider the feasibility of imposing Goods and Services Tax (GST) on UPI transactions above Rs 2,000. The government has imposed 0.4 percent MDR on UPI payments above Rs 2,000 made to merchants from October 15. Whereas, on payment of Rs 75,000 or more, this fee will be maximum Rs 300. Person-to-person transactions and small payments are excluded from the fee.
Merchants will promote cash payments
Some experts have said that the imposition of ‘Merchant Discount Rate’ on UPI transactions above Rs 2,000 may push small merchants and price-conscious consumers back to cash payments. Traders also objected to this and said that they will promote cash payments. “0.4 per cent MDR will not be charged from customers on UPI transactions above Rs 2,000 and banks will run an awareness campaign to remove misconceptions in this regard,” an official source said.
IBA will negotiate with business organizations
He said, ‘We will talk to the Indian Banks Association (IBA) about this.’ He also said that the government will talk to retail traders’ organization CAIT (Confederation of All India Traders) and other trade organizations to allay the apprehensions among small traders regarding UPI (Unified Payments Interface) MDR.
Know what is the government’s new rule regarding UPI payment?
Let us tell you that 0.4% MDR has been imposed on select Person-to-Merchant (P2M) UPI payments above Rs 2000. This new framework will be effective from 15 October 2026. This MDR is not to be recovered from the customer. The government has clarified that the customer will not pay any separate fee while paying through UPI.
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SK Sharma is a content writer who writes on news, entertainment, and lifestyle topics. She has over four years of experience and is known for conveying information in simple and clear language.
