Finance Ministry Junks Reports Claiming Imposition Of MDR on UPI Payments

Digital transactions in India have surged, largely due to the Unified Payments Interface (UPI). Recent reports suggested that the government might reintroduce the Merchant Discount Rate (MDR) for UPI transactions exceeding Rs 3,000. However, the Finance Ministry has dismissed these claims as false. The government remains committed to promoting digital payments through UPI without imposing MDR.

The Central Board of Direct Taxes (CBDT) decided not to apply MDR on person-to-merchant (P2M) UPI transactions. This decision has been in effect since January 2020. Currently, credit and debit cards incur an MDR ranging from 0.9 per cent to 2 per cent, but RuPay cards are exempt from this charge.

UPI's Role in Digital Transactions

UPI has become a dominant force in India's digital payment landscape. It accounts for 80 per cent of digital retail transactions nationwide. Since its launch a decade ago, UPI has facilitated significant growth in person-to-merchant transactions, reaching Rs 60 lakh crore since 2020.

The Payments Council of India (PCI) has proposed a 0.3 per cent MDR for large merchants. Despite this suggestion, the government maintains its stance against imposing MDR on UPI transactions to encourage widespread adoption and ease of use.

Government's Stand on MDR Speculations

The Finance Ministry addressed rumours about potential MDR charges on UPI transactions through a post on X (formerly Twitter). It stated: "Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading...Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens."

Data from the National Payments Corporation of India (NPCI) highlights UPI's extensive usage. On June 10 alone, there were 634.29 million UPI transactions amounting to Rs 91,838.53 crore. In just the first ten days of June, a staggering 6,346.42 million transactions took place via UPI, transferring Rs 8,98,111.14 crore.