UPI MDR fee hike explained in 10 points: No rollback, Rahul Gandhi vs Centre
The Indian government confirmed that the 0.4% merchant discount rate (MDR) on person‑to‑business UPI transactions above Rs 2,000 will remain in place and will not be withdrawn, despite opposition criticism and a pending Supreme Court challenge. The fee, set to start on October 15, will be capped at Rs 300 for payments of Rs 75,000 or more, while person‑to‑person transfers stay free.
- ✓The Indian government confirmed that the 0.4% merchant discount rate (MDR) on person‑to‑business UPI transactions above Rs 2,000 will remain in place and will not be withdrawn, despite opposition criticism and a pending Supreme Court challenge.
- ✓Under the new framework, merchants will bear the entire 0.4% charge, which will be limited to a maximum of Rs 300 for transactions of Rs 75,000 or higher.
- ✓The fee applies only to business‑related UPI transfers above the Rs 2,000 threshold and is scheduled to take effect from October 15.
- ✓UPI has operated under a zero‑MDR regime since January 2020, a period that coincided with the COVID‑19 pandemic and a surge in digital payments.
The finance ministry announced that the proposed 0.4% MDR on person‑to‑business UPI payments exceeding Rs 2,000 will not be rolled back, reaffirming the decision even as Congress leader Rahul Gandhi publicly condemned the move and a petition was lodged in the Supreme Court. Finance Minister Nirmala Sitharaman and the Ministry of Finance have issued statements emphasizing that the policy is independent of any external pressure and is aimed at sustaining the digital payments ecosystem.
Under the new framework, merchants will bear the entire 0.4% charge, which will be limited to a maximum of Rs 300 for transactions of Rs 75,000 or higher. The fee applies only to business‑related UPI transfers above the Rs 2,000 threshold and is scheduled to take effect from October 15. Person‑to‑person UPI transfers will continue to be free of charge. The government also highlighted that the fee will be shared between banks and payment service providers that process the transactions.
UPI has operated under a zero‑MDR regime since January 2020, a period that coincided with the COVID‑19 pandemic and a surge in digital payments. With more than 55 crore users and 703 participating entities, the system is now being positioned as a financially self‑sustaining platform. Critics, including opposition parties, argue that the fee could burden smaller merchants and lower‑income consumers, while officials contend that the charge aligns with international practices and supports the maintenance of payment infrastructure.
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| Issuing Authority | The Indian Express National |
|---|---|
| Topic Category | BUSINESS |
| Jurisdiction | All India / National |
| Publication Date | 16 September 2026 |