What is the Merchant Discount Rate (MDR) that will be applied to UPI transactions?

The Merchant Discount Rate (MDR) for UPI transactions above ₹ 2,000 will be set at 0.4%, capped at ₹ 300 per transaction for higher-value transactions.

Will customers pay the MDR fee when using UPI for payments?

No, the MDR fee applies only to merchants. Customers are not supposed to pay the MDR fee for UPI payments, regardless of the transaction amount.

How will the introduction of MDR affect small merchants and day-to-day transactions?

Small merchants receiving up to ₹ 1 lakh per month through UPI QR codes will continue to enjoy zero MDR, and over 95% of merchant transactions below ₹ 2,000 will remain free.

Centre debunks 'external pressure' myth over ‘foreign influence’: ‘Goal to build…'

The government also reiterated several points regarding the new UPI framework and clarified that UPI remains free for consumers.

Updated on: Sep 16, 2026, 17:00:08 IST

By HT News Desk

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The government on Wednesday debunked claims that its decision to levy Merchant Discount Rate (MDR) on some merchant UPI payments was influenced by foreign pressure. Since the announcement of the UPI charge, several critics of the move, including the main opposition Congress party, have accused the government of introducing the fee to favour the United States and please US President Donald Trump.

The government has clarified that change in UPI payment system is not due to foreign influence as claimed by Congress. (Representative image)

The finance ministry, in a post on X, clarified that the decision was taken with the “goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem” and that it was made independently. It said any claim of foreign influence was false.

Rahul Gandhi, on Wednesday, accused the government of ‘lying down in front of US President Donald Trump’ by burdening ‘every single Indian person’ with a 'UPI tax'.

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“Some claims suggest the change is due to foreign influence. This is false. India’s UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem,” the Ministry of Finance said.

Also Read | Petrol pump dealers threaten cash-only payments over ₹5 UPI charge above ₹2,000

The government also reiterated several points regarding the new UPI framework and clarified that UPI remains free for consumers.

Key facts presented by the ministry of finance for UPI users:

1. No charges on P2P: Person-to-person transfers will remain free, regardless of the amount.

2. Small merchants protected: Vendors earning up to ₹1 lakh per month through UPI QR codes will continue to enjoy zero charges.

3. Everyday payments remain free: More than 95% of merchant payments are below ₹2,000, and these transactions will remain free.

Also Read | 'End of day consumer pays': Ashneer Grover questions UPI merchant fee, says 'call it tax'

4. Nominal MDR above ₹2,000: Larger merchant transactions above ₹2,000 will attract a 0.4% fee, to be borne by merchants. The government said this is significantly lower than credit-card charges and other network fees.

5. Essential services capped: Railways, fuel, telecom, bill payments, insurance and other essential services will attract a flat fee of ₹5 per transaction above ₹2,000.

6. Special low rates: Mutual fund and securities payments will attract an MDR of 0.02%, capped at ₹300.

The government said the decision to introduce a small fee on higher-value merchant transactions was aimed at keeping the UPI system self-sustainable, secure and innovative.

“The new framework ensures resources from higher-value merchant transactions are reinvested to support small businesses and strengthen digital payments across the country,” the Ministry of Finance said.

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HT News Desk
Follow the latest breaking news, major developments and agenda-setting stories from India and around the world with the newsdesk at Hindustan Times. Operating round the clock, the desk brings together experienced editors, reporters and correspondents to deliver fast, accurate and contextual reporting across subjects that influence public policy, governance, business, society and international affairs. The HT News Desk covers politics, elections, government policies, the economy, business and markets, science and technology, the environment, law and order, infrastructure, education, climate issues and geopolitics, while closely tracking developments across states, institutions and global capitals. The team also leads coverage of major breaking news events, policy announcements, court proceedings, natural disasters, public emergencies and significant international developments. Reports published by the newsdesk are based on information gathered from reporters on the ground, official statements, government agencies, court records, regulatory filings, recognised institutions and other authoritative sources. Stories undergo editorial scrutiny and verification processes to ensure accuracy, fairness and relevance, and are updated as events evolve and additional information becomes available. Whether covering a key political decision in New Delhi, an economic policy shift affecting millions, a landmark court ruling or a major global event, the HT News Desk aims to provide readers with reliable, fact-based journalism that delivers not only the latest developments but also the context and analysis needed to understand their wider implications.Read More

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