The Indian government is considering imposing a merchant fee on UPI and Rupay debit card transactions. However, customers will not be directly affected by this decision.
Possible Merchant Fees on UPI and Rupay Transactions
Currently, businesses do not pay any fees when accepting payments via UPI or Rupay debit cards. However, this was not always the case. Before 2022, merchants were required to pay a Merchant Discount Rate (MDR) to banks for processing these transactions. Now, the government is reviewing a proposal to reintroduce MDR on UPI and Rupay payments.
Will Customers Be Affected?
The introduction of this fee will not impact customers directly, as they will not be charged for making payments via UPI or Rupay cards. According to reports, banks have submitted a proposal to the government, which is currently being reviewed positively by the concerned departments.
At present, large businesses already pay MDR on transactions made via MasterCard, Visa, and credit cards. Banks believe that a similar fee structure should be applied to UPI and Rupay debit card transactions to support the payment infrastructure.
MDR Rules Before 2022
Prior to 2022, merchants were required to pay a fee of less than 1% of the transaction amount as MDR on UPI and Rupay transactions. However, this fee was later removed, contributing to the widespread adoption of UPI as a primary payment method.
UPI Dominates Digital Payments in India
UPI has become the dominant mode of digital transactions in India, holding over 83% market share. According to an RBI report, UPI’s share in digital transactions was 34% in 2019, which has now more than doubled to 83%.
📊 UPI Transaction Statistics:
✅ January 2025 – UPI transactions worth ₹23.48 lakh crore were recorded, the highest ever in a single month.
✅ The remaining 17% of digital transactions include payments made through NEFT, RTGS, IMPS, and debit/credit cards.
What’s Next?
The government is still in the discussion phase regarding the reintroduction of merchant fees on UPI and Rupay debit card transactions. If implemented, the new fee structure is expected to help banks and payment providers maintain and improve the UPI ecosystem.
Would you support a merchant fee on UPI payments? Share your thoughts! 💬📲
