The Ministry of Finance has firmly denied recent media reports that suggested the government is planning to impose Merchant Discount Rate (MDR) charges on Unified Payments Interface (UPI) transactions. In an official post on X, the ministry described the claims as “completely false, baseless, and misleading,” aiming to dispel any uncertainty among the public.
The clarification comes in response to a report by NDTV Profit, which stated that the government was considering ending the zero-MDR regime, particularly for UPI payments above ₹3,000. The article claimed that discussions were underway to introduce MDR selectively for high-value transactions in order to improve the financial sustainability of the system for banks and payment providers.
The Ministry highlighted that since January 2020, UPI payments have been exempt from MDR charges, in line with the government’s effort to encourage digital payments. MDR is a fee typically levied on merchants by banks for processing digital transactions. The current regime ensures that neither merchants nor customers are burdened by these fees when using UPI.
The government’s post on X warned against misinformation, stating that such speculative reports generate fear and confusion among users. “The Government remains fully committed to promoting digital payments via UPI,” it said, reaffirming its stance on maintaining a fee-free structure for this popular mode of payment.
UPI has seen massive growth since its launch in 2016 and now accounts for about 80% of retail digital payments in India. In May 2025, the platform recorded 18.68 billion transactions, up from 17.89 billion in April. The transaction value also rose significantly to ₹25.14 lakh crore from ₹23.95 lakh crore in the previous month, as reported by the National Payments Corporation of India (NPCI).
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According to the Reserve Bank of India’s annual report, India’s success with UPI has placed it at the forefront of global real-time payments, accounting for 48.5% of the global volume. This achievement has reinforced India’s position as a pioneer in digital finance.
While the Payments Council of India has proposed a 0.3% MDR for large merchants using UPI, the government has not endorsed this idea. Currently, MDR charges on credit and debit card transactions range from 0.9% to 2%. The report also mentioned that RuPay credit cards would likely remain exempt from such fees.
The Finance Ministry’s swift denial has put to rest the ongoing speculation regarding MDR charges on UPI transactions. By maintaining the zero-MDR policy, the government has once again underlined its commitment to driving digital adoption across the country without adding cost burdens for users or merchants.
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Published on: Jun 12, 2025, 1:42 PM IST
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