The Union finance ministry dismissed reports of government planning to levy merchant discount rate (MDR) on large-ticket UPI transactions.
In a statement, the ministry called the reports ‘false and baseless’.
“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 ministry said in a post on X.
“The government remains fully committed to promoting digital payments via UPI,” it added.
The rebuttal comes after few media outlets claimed that the government is planning to introduce MDR on transactions worth Rs 3,000 and above to support banks and payment solution providers.
The reports had further claimed that the government may permit lenders to levy MDR on the transaction value rather than merchant turnover.
Earlier this year, the Payment Council of India had urged Prime Minister Narendra Modi-led government to reconsider Zero MDR policy for UPI transactions.
In the letter, the industry body highlighted the pressing financial sustainability concerns facing the digital payments ecosystem due to the continued Zero MDR policy, which has been in effect since January 2020.
While the government has provided financial incentives to offset some of the ecosystem’s operational costs, the letter points out that the Rs 1,500 crore allocation covers only a fraction of the estimated Rs 10,000 crore annual cost required to maintain and expand UPI services.
To address the challenge, the industry proposed the introduction of an MDR for RuPay debit cards for all merchants and a reasonable MDR of 0.3 per cent for UPI only for large merchants.
As on June 1, UPI had recorded 644 million transactions and 650 million the next day, overtaking global payments giant Visa, which processed an average of 639 million daily transactions during FY24. Visa does not share daily transaction data.
The government data shows that for FY 2023-24, the UPI remains the cornerstone of India’s digital payment ecosystem, contributing to 80 per cent of the retail payments across the country. The total transaction volume exceeded 131 billion and the value exceeded Rs 200 lakh crore for FY 2023-24.
