The Indian government clarified that merchants will not be allowed to pass the new UPI Merchant Discount Rate to customers when it goes into effect on October 15.
Reader brief
Through the Reader lens: The Indian government has clarified that the new Merchant Discount Rate on select Unified Payments Interface transactions above 2,000 rupees must not be passed on to customers. Starting October 15, certain person-to-merchant transactions will incur a 0.4 percent fee, which merchants must pay. To protect consumers, banks and payment aggregators will strictly monitor transactions, while small merchants with monthly UPI receipts under 100,000 rupees will be exempt from the fee.
What to watch next
- Effectiveness of the government's monitoring system and payment aggregators in preventing merchants from passing MDR charges to consumers starting October 15, 2026.
- The reactions of the Goods and Services Tax Council if any GST-related complications arise regarding the MDR.
Sources1
All filed from IndiaNamed India · GST Council · Securities and Exchange Board of India · Unified Payments Interface