UPI fee: Why govt is putting a price on big merchant payments

New Delhi, The government is putting a price for merchants using its flagship digital payment network to accept large transactions – a shift that follows years of warnings from the payment industry that the annual subsidy budgeted for the Unified Payments Interface (UPI) never came close to covering the real cost of running it.

From October 15, a 0.4 per cent Merchant Discount Rate (MDR) will apply to person-to-merchant UPI payments above Rs 2,000. The charge will be paid by merchants, not consumers, and will be capped at Rs 300 for transactions of Rs 75,000 or more. Payments between individuals, as well as the vast majority of everyday merchant payments, will remain free.