{"id":2207,"date":"2026-09-25T08:33:13","date_gmt":"2026-09-25T08:33:13","guid":{"rendered":"https:\/\/newsraise.com\/in\/2026\/09\/25\/finance-minister-upi-mdr-consumers\/"},"modified":"2026-09-25T08:33:13","modified_gmt":"2026-09-25T08:33:13","slug":"finance-minister-upi-mdr-consumers","status":"publish","type":"post","link":"https:\/\/newsraise.com\/in\/2026\/09\/25\/finance-minister-upi-mdr-consumers\/","title":{"rendered":"Finance Minister says UPI MDR charge will not be passed to consumers"},"content":{"rendered":"\n<!-- Quick Adsense WordPress Plugin: http:\/\/quickadsense.com\/ -->\n<div class=\"9fece8afa224fd09e54b043d0febfb58\" data-index=\"1\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n<script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\r\n<!-- NR ATF -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-client=\"ca-pub-8898941184964366\"\r\n     data-ad-slot=\"4839033563\"\r\n     data-ad-format=\"auto\"\r\n     data-full-width-responsive=\"true\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script>\n<\/div>\n<p>Union Finance Minister Nirmala Sitharaman on Friday emphasized that the Merchant Discount Rate (MDR) applied to Unified Payments Interface (UPI) transactions exceeding Rs\u202f2,000 is not a government\u2011imposed charge and will not be transferred to end\u2011users. She said the cost will be shouldered by traders, merchants, bankers and other participants in the payments ecosystem.<\/p>\n<h2>Understanding the Merchant Discount Rate<\/h2>\n<p>Sitharaman explained that the MDR is a fee levied by entities that facilitate the transaction, including the National Payments Corporation of India (NPCI), payment aggregators, service providers, point\u2011of\u2011sale (POS) machine manufacturers and merchant banks. These parties provide the infrastructure and services required for processing high\u2011value UPI payments, and the fee is intended to cover those operational costs.<\/p>\n<p>The minister stressed that the MDR is neither a tax, nor a cess, nor a surcharge, and the revenue collected does not flow into the Consolidated Fund of India. &#8220;This is not a government issue,&#8221; she said, adding that the charge will not appear on consumer bills and will not be reflected as a cost for customers.<\/p>\n<h2>Impact on Consumers and Businesses<\/h2>\n<p>The clarification arrives amid ongoing speculation about a newly announced Rs\u202f2,000 charge on UPI transactions. NPCI Managing Director and CEO Dilip Asbe previously noted that the likelihood of consumers ultimately bearing the MDR is limited to roughly 10\u202fpercent of the overall value on which the fee is collected.<\/p>\n<p>At the 13th SBI Banking &amp; Economics Conclave 2026, Asbe highlighted that a large share of UPI activity falls outside the MDR framework. Approximately 75\u202fpercent of the total UPI transaction value does not trigger the charge because it consists of payments below the Rs\u202f2,000 threshold.<\/p>\n<p>Current figures show UPI handling around Rs\u202f30\u202flakh crore in total transaction value, with merchant payments accounting for about Rs\u202f6\u20117\u202flakh crore. The MDR applies only to the subset of merchant transactions that exceed Rs\u202f2,000, meaning that the majority of QR\u2011code based merchant payments\u2014estimated at 75\u202fpercent\u2014remain unaffected by the new fee.<\/p>\n<p>When MDR collections do occur, they are heavily concentrated among larger enterprises. Asbe indicated that roughly 80\u202fpercent of the fee revenue comes from businesses whose annual gross merchandise value (GMV) or digital payment collections exceed Rs\u202f1,000\u202fcrore. These firms already accept credit\u2011card payments, which carry higher processing fees, and are therefore less inclined to shift the UPI charge onto their customers.<\/p>\n<p>Businesses with annual turnover of Rs\u202f1\u202fcrore and above could contribute an additional 10\u202fpercent of MDR collections. Like the larger firms, they typically accept credit\u2011card transactions and may not feel pressure to pass the UPI cost onto shoppers.<\/p>\n<p>The remaining 10\u202fpercent of MDR collections represent the segment where there is a theoretical risk of the charge being passed to consumers. Asbe stressed that banks, NPCI and payment aggregators must work together to prevent such pass\u2011through, noting that the real risk of a consumer being charged is limited to that 10\u202fpercent slice of overall value.<\/p>\n<p>Looking ahead, Asbe projected a modest rise in UPI activity for the current year: transaction value is expected to increase by about 10\u202fpercent, while the number of transactions could grow between 15 and 17\u202fpercent. He attributed the slower pace to reduced investment by ecosystem participants after an initial five\u2011to\u2011six\u2011year period of heavy spending on UPI infrastructure. The absence of a clear revenue model has prompted many players to scale back, and factors such as education, awareness and trust continue to influence adoption.<\/p>\n<p>Despite the near\u2011term growth outlook, NPCI\u2019s longer\u2011term ambition remains expansive. The organization aims to expand UPI usage to one billion users and to develop infrastructure that can support broader financial services, including credit, investments and insurance, thereby deepening the digital economy.<\/p>\n\n<div style=\"font-size: 0px; height: 0px; line-height: 0px; margin: 0; padding: 0; clear: both;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>Finance Minister Nirmala Sitharaman clarified that the merchant discount rate on UPI transactions above Rs\u202f2,000 is not a government levy and will be borne by merchants, not consumers.<\/p>\n","protected":false},"author":2,"featured_media":2208,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[299],"tags":[2108,2067,497,287,305],"class_list":["post-2207","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-digital-payments","tag-mdr","tag-nirmala-sitharaman","tag-npci","tag-upi","entry"],"_links":{"self":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts\/2207","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/comments?post=2207"}],"version-history":[{"count":0,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts\/2207\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/media\/2208"}],"wp:attachment":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/media?parent=2207"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/categories?post=2207"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/tags?post=2207"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}