The Ministry of Finance has put an end to reports suggesting that UPI transactions will be expensive in the near future, as the government is to impose a Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions. The ministry has termed these claims as “false, baseless, and misleading”.
“Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading,” the Ministry of Finance said Thursday.
It added that such claims only create unnecessary confusion among the public and serve no purpose. “Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens,” it further stated.
“The Government remains fully committed to promoting digital payments via UPI,” it added as the government continues to expand digital infrastructure.
Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading.
— Ministry of Finance (@FinMinIndia) June 11, 2025
Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens.
The Government remains fully committed…
Claims were made after PCI’s letter to govt
The clarification comes after several outlets reported that the government is considering reintroducing MDR charges on UPI payments exceeding Rs 3,000 to help reduce financial strain on banks and payment service providers.
The speculations around the charges on UPI transactions came after the Payments Council of India (PCI) wrote a letter to the government to ward off the Zero MDR policy implemented in January 2020. It also proposed a nominal MDR of 0.3% for large merchants using UPI, and also for RuPay debit card transactions across all merchant categories.
PCI said that the payment service providers have been struggling financially, as the government’s Rs 1,500 crore incentive falls far short of the estimated Rs 10,000 crore to maintain and grow UPI infrastructure.
What is MDR?
MDR is a fee that banks charge merchants for processing digital payments. Before 2020, merchants typically paid around 1% of the transaction value on card payments.
In January 2020, the government removed MDR charges for debit cards to boost digital adoption.
MDR, however, is still applicable to most credit card transactions, and the rates vary between 1% to 3%. For this, various factors are taken into consideration, including the type of card, transaction size, and merchant category.
Record UPI transactions this year
With a record 16.99 billion UPI transactions in January this year, May recorded the highest number of UPI transactions to date. In May, UPI processed an impressive 18.68 billion transactions, amounting to Rs 25.14 lakh crore.
It also marks a 33 per cent year-on-year increase in transaction volume compared to the 14.03 billion transactions in the same month last year. The 2023–24 fiscal year saw more than 131 billion transactions, which amounted to over Rs 200 lakh crore.