Several media reports suggested that UPI (Unified Payments Interface) might become costlier due to potential MDR (Merchant Discount Rate) charges on high-value transactions, potentially affecting its popularity. UPI has gained popularity because it has been free since its launch, making it one of the most widely used real-time payment services in India.

The Finance Ministry has strongly denied the claims about UPI charges, calling them false and misleading, and has reaffirmed its commitment to promoting digital payments through UPI.

This official clarification comes as several reports claimed that the MDR would be applied to large UPI transactions.

“Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading. Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens. The Government remains fully committed to promoting digital payments via UPI,” read the tweet by Ministry of Finance.

All About MDR

MDR (Merchant Discount Rate) is a kind of fee that banks charge merchants for instant payment processing. Previously, merchants paid 1% MDR on card transactions, but the government waived debit card MDR charges in 2020 to boost digital payments.

MDR still applies to most credit card transactions, with rates ranging from 1% to 3%, depending on the card type, transaction size, and merchant category.

It is worth noting that Unified Payments Interface is managed by the National Payments Corporation of India (NPCI), and is currently the most widely used payment platform in India.