New Delhi [India], June 11 : The Finance Ministry on Wednesday termed as "false, baseless, and misleading" speculation that the Merchant Discount Rate (MDR)will be charged on UPI transactions.
"Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading. Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens," Finance Ministry said in a post on X.
"The Government remains fully committed to promoting digital payments via UPI," it added.
The Finance Ministry's rebuttal came after reports in a section of media claimed that the Centre is considering reintroducing MDR on UPI transactions above Rs 3,000 in a move to support banks and payment service providers.
The reports citing sources said discussions are underway to allow MDR based on transaction value rather than merchant turnover.
In March this year, the Payments Council of India (PCI), an industry body representing a diverse range of non-banking payment industry players, with 180 members, had submitted a letter to the government, seeking urgent reconsideration of the Zero Merchant Discount Rate (MDR) policy for Unified Payments Interface (UPI) and RuPay debit card transactions.
In the letter, the industry body highlighted the pressing financial sustainability concerns facing the digital payments ecosystem due to the continued Zero MDR policy, which has been in effect since January 2020.
While the government has provided financial incentives to offset some of the ecosystem's operational costs, the letter points out that the INR 1,500 crore allocation covers only a fraction of the estimated Rs 10,000 crore annual cost required to maintain and expand UPI services.
To address the challenge, the industry proposed the introduction of an MDR for RuPay debit cards for all merchants and a reasonable MDR of 0.3 per cent for UPI only for large merchants.
As per the official data, for the first time, UPI transactions in the month of January 2025 surpassed 16.99 billion and the value exceeded Rs 23.48 lakh crore, marking the highest number recorded in any month.
The government data shows that for FY 2023-24, the UPI remains the cornerstone of India's digital payment ecosystem, contributing to 80 per cent of the retail payments across the country. The total transaction volume exceeded 131 billion and the value exceeded Rs 200 lakh crore for FY 2023-24.