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.
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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.
A 0.4% charge on merchant UPI payments over ₹2,000, effective Oct. 15, spurred gains in payment firms and banks, while keeping person‑to‑person transfers free.