Finance Ministry denies reports of MDR charges on UPI transactions, calls them baseless

The Union Finance Ministry on Wednesday dismissed reports suggesting the government is considering levying charges on Unified Payments Interface (UPI) transactions, calling the claims “completely false, baseless, and misleading.”

In an official post on social media platform X, the ministry clarified that there is no proposal to introduce a Merchant Discount Rate (MDR) on UPI payments. It added that such speculation creates unwarranted confusion among users and businesses at a time when digital adoption is growing across the country.

“Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens,” the ministry said. “The Government remains fully committed to promoting digital payments via UPI.”

The clarification comes in response to a recent media report that claimed the Centre was weighing the option of imposing MDR on high-value UPI transactions, specifically those exceeding Rs. 3,000. The report suggested that the policy, if implemented, would aim to cover rising infrastructure and operational costs incurred by banks and payment service providers due to the surge in large digital payments.

The report also mentioned that the Payments Council of India had proposed a 0.3 per cent MDR for large merchants accepting UPI payments. It claimed that discussions were underway with stakeholders, including the National Payments Corporation of India (NPCI), and that a final decision could be taken in the coming months. However, no official confirmation on such deliberations has been issued by the government or regulatory authorities.

UPI, which currently facilitates nearly 80 per cent of India’s retail digital transactions, remains a cornerstone of the country’s cashless economy push. Since the launch of the zero-MDR policy in January 2020, digital payments via UPI have seen exponential growth. The total value of person-to-merchant transactions through UPI has crossed Rs. 60 lakh crore since 2020, reflecting its deep integration into daily commerce.

Banks and fintech players have previously raised concerns over the rising cost burden of high-frequency, zero-cost transactions. Still, the government’s position remains unchanged in favour of maintaining a free-to-use system to support wider financial inclusion and digital transformation.

With this clarification, UPI transactions will continue without any additional charges for consumers or merchants, reinforcing the government’s focus on fostering a secure, accessible, and affordable digital payments ecosystem.