No Rollback Of UPI Charges, Govt Says; 0.4% MDR On Payments Above Rs 2,000 To Continue

The Centre has ruled out any rollback of the new Merchant Discount Rate (MDR) framework for certain high-value UPI payments, saying the decision is aimed at making the digital payments ecosystem financially sustainable. A government official, cited by PTI, said that the decision had been taken and there was no question of reversing it.

Under the new framework, a 0.4% MDR will apply to merchant transactions above Rs 2,000 from October 15, while person-to-person payments and small-merchant transactions remain free. A government official told PTI that the MDR regime would not be withdrawn or reconsidered.

The official said similar charges are imposed in other countries and argued that the structure would help make UPI financially self-sustaining. The Finance Ministry has said UPI will remain free for all person-to-person transactions, regardless of the amount transferred.

Merchant payments of up to Rs 2,000 will remain free for now. The government has said around 96% of merchant transactions will be unaffected. The 0.4% MDR will apply to person-to-merchant transactions above Rs 2,000. For transactions of Rs 75,000 or more, the MDR will be capped at Rs 300 per transaction.

The framework has been challenged in the Supreme Court through a public interest litigation. The petition, filed by lawyer Anjan Dutta, challenges the Centre's September 14 notification and the MDR framework announced on September 15.

The petition challenges the constitutional validity of amended Section 10A of the Payment and Settlement Systems Act, 2007. It argues that the provision gives the executive powers to determine which digital payment transactions should remain free without adequate safeguards or guidelines.

The petitioner has questioned the rates, transaction thresholds, caps and sector classifications. The plea alleges that the framework is arbitrary and discriminatory and could adversely affect merchants operating on narrow profit margins.

The government has defended the framework as necessary to support investment in UPI infrastructure, cybersecurity, fraud prevention and long-term sustainability. It has stressed that customers will not pay the MDR. Vinita Bhat is a Chief Copy Editor at ABP Live English, with experience in TV and digital journalism.

She covers geopolitics, international conflicts, global current affairs and Kashmir. For tips and queries, write to vinitab@abpnetwork.com.