The National Payments Corporation of India has pushed back the 0.4% merchant discount rate on high‑value UPI transactions to a date after Diwali, citing trader concerns and festive‑season pressures.
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A report by IIT‑Bombay professors recommends cutting the UPI merchant discount rate to 0.08%, eliminating banks' 70% share of revenue and directing funds toward the platform’s upkeep.
A 0.4% merchant discount rate on UPI payments above Rs 2,000 could drive three‑quarters of users toward cash, credit cards or bank transfers, according to a LocalCircles survey.
Finance Minister Nirmala Sitharaman clarified that the merchant discount rate on UPI transactions above Rs 2,000 is not a government levy and will be borne by merchants, not consumers.
The government cited a finance committee report and backing from Congress MPs to justify a new fee on high‑value UPI transactions, while Rahul Gandhi questioned the move.