The record
Written from the 1 report below. Nothing here is unsourced.
- The Indian government has imposed a 0.4% Merchant Discount Rate on UPI payments above 2,000 rupees, effective October 15.
- The fee applies only to merchants, and person-to-person transfers and small traders earning up to 1 lakh rupees a month remain free; only about 4% of merchant transactions fall under it.
- Customers scanning QR codes pay nothing extra, apps cannot add platform fees, and merchants are barred from passing the charge to the bill.
- The banking sector says running and securing the UPI system costs about 20,000 crore rupees a year, but the announcement came just 15 months after the finance ministry had dismissed MDR reports as completely false.
- The charge will likely be perceived as a hidden tax on a free service, a sentiment issue with political consequences months before elections in Uttar Pradesh.
What to watch next
- Whether merchants quietly pass the 0.4% fee into bills despite the ban, and how effectively banks police this
- Public perception: whether the 'UPI tax' narrative spreads and hits the ruling party in upcoming Uttar Pradesh elections
- Possible government rollback or dilution of the MDR if criticism intensifies
Coverage1
1 report
Indian-language1
All filed from India
Named India · Amit Malviya · Bharatiya Janata Party · Congress · Government of India · Ministry of Finance · NPCI · RBI
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