No Merchant Discount Rate Will Be Levied on Transactions Through UPI Platforms: FM

New Delhi: The Union Finance Ministry has clarified that no merchant discount rate (MDR) will be levied on transactions through Unified Payments Interface or UPI platforms. The ministry, however, said that such unfounded speculation, which creates a sensation, causes unnecessary uncertainty, fear and suspicion among our people, and the government is fully committed to continuing to support digital payments via UPI.

The rebuttal came after multiple reports circulated on social media claiming that the government would impose an MDR on larger 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,” the ministry said in a post on X on Wednesday.

The MDR is the cost paid by a merchant to a bank for accepting payment from their customers via digital means. The merchant discount rate is expressed in percentage of the transaction amount. The ministry's clarification came following some reports that the government is planning to impose MDR on large-ticket UPI transactions. “However, the government remains fully committed to promoting digital payments via UPI,” the ministry said.

The National Payments Corporation of India (NPCI) also said that the value of the transactions last month was 23 per cent higher as compared to Rs 20.44 lakh crore in the year-ago period. As per NPCI data, transactions through UPI touched a record high of Rs 25.14 lakh crore in May, recording a growth of 5 per cent over the preceding month. The UPI transaction value was Rs 23.94 lakh crore in April. In terms of volume, 1,867.7 crore transactions were done in May against 1,789.3 crore in the previous month.