UPI MDR from October 15: Govt plans daily monitoring to stop merchants passing 0.4% fee to customers
The government is negotiating with payment aggregators regarding the new UPI transaction fees, effective October 15, to ensure that these charges are not passed on to consumers. The finance ministry plans daily monitoring to ensure adherence to the new guidelines. The new Merchant Discount Rate (MDR) applies to UPI payments over ₹2,000 for specific services like fuel and railway tickets (flat ₹5), and 0.4% for other P2M transactions above ₹2,000 outside specified categories. The aim is to balance managing costs for digital payment infrastructure and fostering digital payment adoption.
What this means
The government's strict stance on not burdening consumers with UPI MDR, coupled with daily monitoring, indicates a commitment to the 'free for consumer' model. Banks and payment aggregators will need to absorb or manage these costs without shifting them to end-users, affecting their revenue models and pricing strategies.
Most affected: Payment Aggregators, Commercial Banks, Merchants
Key takeaway: Banks and payment aggregators must finalize internal strategies for absorbing or managing new UPI MDRs without impacting consumer-facing charges, anticipating rigorous government oversight.
Get stories like this in your inbox every morning
Free daily brief — rates, RBI updates and the banking stories that matter, in 3 minutes.