Daijiworld Media Network - New Delhi
New Delhi, Sep 16: Opposition members of Parliament have raised strong objections to the Centre's decision to introduce a Merchant Discount Rate (MDR) on certain UPI payments above Rs 2,000, with several MPs describing the move as "anti-people" at a meeting of the Parliamentary Standing Committee on Finance.
Committee Chairman Bhartruhari Mahtab said the issue was raised by some members during the meeting and indicated that it could be taken up for discussion at the panel's next meeting. RSP MP N K Premachandran, who is a member of the committee, reiterated his opposition to the move, describing it as completely "anti-people".
The National Payments Corporation of India (NPCI) has introduced an MDR of 0.4 per cent on eligible person-to-merchant (P2M) UPI transactions exceeding Rs 2,000 from October 15. The new framework ends nearly six years of zero-MDR transactions for certain merchant payments, while keeping person-to-person transfers and smaller merchant payments outside the charge.
Under the new system, the 0.4 per cent MDR will be paid by eligible merchants to their acquiring banks. The charge will be capped at Rs 300 for transactions of Rs 75,000 and above. Payments of up to Rs 2,000, which account for more than 95 per cent of UPI person-to-merchant transaction volumes, will remain exempt.
The Union Finance Ministry has clarified that customers will not be charged for making UPI payments. MDR is a charge within the merchant payment ecosystem and is not a fee imposed on consumers.
Person-to-person UPI transactions, including transfers between an individual's own accounts, will continue to remain free without monthly quotas, volume restrictions or tiered limits. UPI applications will also not be permitted to impose platform fees on such payments.
Small merchants receiving up to Rs 1 lakh a month through UPI QR codes under the specified merchant category will also remain exempt. An individual payment above Rs 2,000 does not by itself remove the exemption. Merchants receiving more than Rs 1 lakh a month for three consecutive months will move into the person-to-merchant category.
The new framework also provides concessional rates for certain sectors. Payments above Rs 2,000 in areas including railways, telecommunications, insurance, fuel and specified public utilities will attract a flat Rs 5 MDR. Capital-market transactions will carry an MDR of 0.02 per cent, capped at Rs 300, while UPI mandates and AutoPay transactions have no prescribed MDR under the framework.
According to NPCI, the revenue generated through the new framework will remain within the UPI ecosystem and support infrastructure resilience, cybersecurity, innovation and customer services. UPI processed 24.51 billion transactions worth Rs 29.9 lakh crore in August 2026, underscoring the scale of the country's digital payments network.
The move has nevertheless triggered political criticism. Opposition MPs at the parliamentary panel meeting argued that any change to the widely used UPI payment system could have a broad impact on people and businesses, and sought further discussion on the issue.