UPI Transaction Fees Payment: There may be a major change in the digital payment system as the government is considering imposing merchant charges (MDR) on Unified Payments Interface (UPI) and RuPay debit cards.
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UPI Transaction Fees Payment
The Payment Council of India has written a letter to Prime Minister Modi on Monday. In the letter, PM Modi has been asked to reconsider the Zero Merchant Discount Rate (MDR) policy. The Council is in favor of not levying merchant fees on transactions made through Unified Payments Interface (UPI) and RuPay debit cards.
The government is considering re-implementing merchant charges i.e. fees on UPI transactions and RuPay debit cards. The Economic Times has given this information, quoting two senior bank officials.
Currently, no merchant discount rate (MDR) is levied on these payment methods as they are facilitated by the National Payments Corporation of India (NPCI). However, there is a discussion on levying fees on large merchants while keeping the transactions free for small businesses.
UPI Transaction Fees Payment: Why is the Government Considering this Step?
A banker said that banks have submitted a formal proposal to the government. In this proposal, it has been suggested that MDR should be implemented on those merchants whose annual GST turnover is more than Rs 40 lakh.
The government is also planning to introduce a tiered pricing system. Under this system, big merchants will have to pay higher charges. Whereas small merchants will have to pay lower fees.
“The logic is, if large merchants who have card machines are paying MDR on other payment instruments like Visa and MasterCard debit cards and all types of credit cards, why can’t they pay charges for UPI and RuPay debit cards?” said a banker.
How does MDR work, and why was it removed?
Before 2022, merchants had to pay banks less than 1% of the transaction amount as MDR, i.e. Merchant Discount Rate. However, the government removed these charges in the FY22 budget to promote digital payments. Since then, UPI has become the most used payment method, and RuPay has also become quite popular.
Meanwhile, industry insiders say that large retail merchants make more than 50% of their payments through cards on average. Therefore, a small fee is unlikely to have a major impact on UPI payments.
UPI Transaction Fees Payment: 1,611 Crore UPI Transactions in February
In February 2025, 1611 core transactions were done through Unified Payment Interface (UPI). During this period, a total amount of Rs 21.96 lakh crore was transferred. The number of transactions has increased by 33% on an annual basis.
At the same time, there has been a 20% increase in the amount transferred through this. A year ago i.e. in February 2024, transactions worth Rs 18.28 lakh crore were done through 1210 crore transactions. At the same time, till March 3 this month, about 39 lakh UPI transactions were done, through which an amount of Rs 1050 crore was transferred.
5% Fewer transactions in February as compared to January
There was a 5% decrease in the number of transactions compared to January, a month ago. In January, people transferred an amount of Rs 23.48 lakh crore through 1699 crore transactions. The National Payment Corporation of India (NPCI) regulates UPI.
Jay Chavda He is the Founder and Writer of businesspulsecare.com. He is an I.T Engineer, Freelancer, Businessman. He posts Business, Stock/Share Market, Finance Related News and updates on the website. 🔗