UPI: Payment through UPI-Rupay debit card not to be free for big traders, preparation to levy merchant charges

New Delhi| The era of free payment through UPI and RuPay debit cards is about to end. The government is preparing to re-impose merchant fees on payments made from these two. Before 2022, merchants had to pay a Merchant Discount Rate (MDR) fee for such transactions.

According to sources, if the government brings back MDR charges on UPI and RuPay debit card payments, it will not have a direct impact on consumers as they will not be charged any fee for making the payment. Banks had sent a formal proposal to the central government to bring back MDR on UPI payments for big traders. Now the concerned departments are considering it positively. Traders paid less than one percent of the transaction amount in fees before MDRs were removed in 2022.

It is necessary to bring back MDR
Payment companies say that it is necessary to bring back the MDR. The cost of complying with the new rules has increased. Without fees on UPI payments many businesses may struggle to make profits. The government is subsidizing banks and fintechs to cover these processing costs, which is not enough. The government has reduced payment subsidies from 3,500 crore to 437 crore in the budget.