- By Aditya Pratap Singh
- Tue, 11 Mar 2025 03:39 PM (IST)
- Source:JND
UPI Latest Update: The union government is thinking of bringing back the merchant discount rate (MDR) for major corporate transactions made through RuPay debit cards and Unified Payments Interface (UPI). Merchants across the country do not pay any transaction fee as of now, but media sources suggest that the policy could be changed to include MDR for retailers with annual sales of more than Rs 40 lakh.
Review proposal
According to a report published in The Economic Times, representatives from the banking sector have formally asked the government to reinstate MDR for high-revenue retailers. The proposal has received a favorable response from the government, and is currently being examined by the appropriate departments.
As per the plan, MDR will be levied based on GST filings, thereby guaranteeing that only major retailers will be liable and smaller companies will be exempted from it. In addition, a tiered pricing scheme is being considered, in which smaller firms will either continue to enjoy $0 costs or be charged a lower rate, while merchants with higher turnover will have to pay a higher MDR.
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Overview of MDR Policy
To promote digital transactions, banks and payment service providers charge merchants a fee called MDR. To promote digital payments, the government removed this fee from UPI and RuPay debit card transactions in 2022. To guarantee a sustainable payment infrastructure, the government is now reviewing the policy because of the significant growth in digital transactions.
UPI Transaction Growth
In India, UPI still holds a dominant position in the digital payments market. The National Payments Corporation of India (NPCI) reports that in February 2025, UPI processed 16.11 billion transactions, totaling over Rs 22 trillion. The total number of transactions as of January 2025 was 16.99 billion.
If implemented, the MDR policy change could impact large-scale businesses while digital payments will remain free for smaller merchants, ensuring balanced growth in the digital payments ecosystem.