Will UPI transaction fees for merchants increase, making your payments more expensive?

In India, the government may reintroduce merchant charges for large businesses on UPI and RuPay debit card transactions. The fees were waived in 2022, allowing companies to avoid paying charges for such payments. Previously, merchants had to pay a nominal fee, known as the merchant discount rate (MDR), to banks for processing UPI and RuPay transactions.

If MDR charges return, users won’t be directly affected since they wouldn’t pay fees – it would be merchants instead. A banker informed the Economic Times that banks proposed this change to the Union government, and officials are now reviewing it favorably.

Large businesses pay MDR for Visa, Mastercard, and credit card transactions but not for UPI and RuPay transactions. Industry players suggest imposing MDR on UPI and RuPay transactions. Payment companies argue that reinstating MDR is crucial due to increased compliance costs. Without MDR on UPI payments, profitability may be an issue for many businesses in this sector.

Sources News From Various Digital Platforms, Websites, Journalists, And Agencies.