A big news has come out regarding UPI, which has become the main medium of digital payments in India. New UPI rules may apply to transactions above Rs. 2,000 According to the reports, the central government is considering imposing a merchant fee (MDR) for large traders and commercial establishments on UPI transactions of more than Rs 2,000. If this proposal is implemented, there will be a big change in the digital payment system of the country. MDR is a fee paid by businesses to payment processors for accepting digital payments.
Merchant Discount Rate(MDR) May Apply to Transactions Exceeding Rs. 2,000
According to Sources, the Central Government may reintroduce a merchant discount rate (MDR) on UPI transactions of Rs 2,000 and above for large merchants to compensate banks and payment service providers for rising operational costs and technology investments. The proposed MDR on UPI payments accepted by large merchants won’t exceed 0.5% of the monetary value. This fee is charged by banks for processing digital transactions. A senior government official said that discussions are underway on the proposal and a decision on it is likely to be taken in the next two weeks. This MDR will be applicable only to large merchants.
No Fee will be Charged from Normal UPI Users
The government has clarified that no fee will be charged from the Normal consumer for using UPI. This proposal is being considered only with a view to making the merchants and the payment system financially sustainable. According to officials, while the use of UPI is increasing rapidly, its infrastructure, security and operational costs are also increasing. Therefore, the government is focusing on making the system financially sustainable in the long run.
Currently, the central government is giving incentives to banks and payment service providers for UPI transactions up to Rs 2,000. A special scheme was launched in the financial year 2022 to promote Rupay debit cards and low-cost BHIM-UPI transactions.
A parliamentary standing committee report on March 12, 2026, said that digital transactions have increased due to the Zero MDR policy, but this does not make the UPI system financially sustainable. The report said that in the next 5-7 years, about 600 million new users can be added to UPI and 100-150 billion transactions can be made per month. However, this requires more investment in infrastructure, security and other systems.
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