The Indian government is actively engaging with payment aggregators and other stakeholders to address concerns about the newly introduced Merchant Discount Rate (MDR) for UPI payments exceeding Rs 2,000, aiming to prevent the charges from being passed on to consumers. A monitoring system is being put in place by the Finance Ministry to ensure compliance, with the new MDR of 0.4% for person-to-merchant transactions over Rs 2,000 set to take effect from October 15, while smaller and peer-to-peer transactions will remain free. The government has refuted claims that international pressure influenced this decision and does not expect a significant impact on UPI transaction volumes or a shift towards cash.

The Indian government is actively engaging with payment aggregators and other stakeholders to address concerns about the newly introduced Merchant Discount Rate (MDR) for UPI payments exceeding Rs 2,000, aiming to prevent the charges from being passed on to consumers. A monitoring system is being put in place by the Finance Ministry to ensure compliance, with the new MDR of 0.4% for person-to-merchant transactions over Rs 2,000 set to take effect from October 15, while smaller and peer-to-peer transactions will remain free. The government has refuted claims that international pressure influenced this decision and does not expect a significant impact on UPI transaction volumes or a shift towards cash.

The Indian government is actively engaging with payment aggregators and other stakeholders to address concerns about the newly introduced Merchant Discount Rate (MDR) for UPI payments exceeding Rs 2,000, aiming to prevent the charges from being passed on to consumers. A monitoring system is being put in place by the Finance Ministry to ensure compliance, with the new MDR of 0.4% for person-to-merchant transactions over Rs 2,000 set to take effect from October 15, while smaller and peer-to-peer transactions will remain free. The government has refuted claims that international pressure influenced this decision and does not expect a significant impact on UPI transaction volumes or a shift towards cash.

Amid concerns that customers will have to bear the brunt of the newly introduced Merchant Discount Rate (MDR) for UPI payments above Rs 2,000, the Centre is reportedly holding talks with payment aggregators and other stakeholders in the Unified Payments Interface (UPI) ecosystem.

Other steps also include setting up a monitoring mechanism under the Finance Ministry to ensure that the burden does not get passed down to the consumers. However, the Centre is yet to publicly detail exactly how this daily monitoring will work.

As per the new guidelines, from October 15, a 0.4 per cent MDR  will apply to person-to-merchant UPI payments above Rs 2,000.  The charge will be paid by merchants and will be capped at Rs 300  for transactions of Rs 75,000 or more. However, payments between individuals, as well as the vast majority of everyday merchant payments, will remain free.

A senior official associated with the government's finance department told PTI that every transaction made by the traders will be monitored from October 15. Special attention will be paid to those whose volume is high on a daily basis. The data obtained will be compared with the statistical report of the bank.

UPI application providers have also been prohibited from imposing platform fees or hidden charges, the Finance Ministry said.

Meanwhile, amid allegations that US pressure was behind the move. Sources said it is anticipated that the imposition of MDR  would not lead to a reduction in UPI transactions, as only 4 per cent of total volume is getting impacted due to the decision.

The Finance Ministry on Thursday dismissed allegations that US  pressure influenced the decision to levy a 0.4 per cent MDR, saying the latest NPCI guidelines do not give international credit cards any advantage over RuPay, and asserted that it does not expect the levy to trigger a shift towards cash transactions.

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