The Centre has proposed amendments to the Payment and Settlement Systems Act that could pave the way for merchant charges on certain Unified Payments Interface (UPI) transactions. While no fee has been introduced yet, the legal changes would allow the government to impose a Merchant Discount Rate (MDR) if required.
According to proposals under discussion, UPI payments above ₹2,000 made to merchants with an annual turnover exceeding ₹1.5 crore could attract an MDR of 0.3% to 0.5%. Consumers are expected to remain unaffected, with the charge likely to be borne by eligible businesses. Smaller merchants may continue to enjoy fee-free UPI transactions.
The payments industry has long argued that the absence of MDR limits its ability to invest in technology, improve infrastructure, and sustain digital payment services. Introducing a fee on high-value transactions is seen as a way to strengthen the ecosystem without impacting everyday users.
UPI remains India’s largest real-time payment platform, processing 23.6 billion transactions worth ₹29.9 trillion in July. However, the proposal is still under consideration, and the government has not announced whether or when any merchant fee will be implemented.