India’s digital payments revolution may be entering a new phase.
A new fee on certain UPI transactions has sparked questions for businesses.
From 15 October, a 0.4% fee will apply to certain UPI payments above ₹2,000 made by customers to businesses.
The business will pay the fee. According to the announcement, businesses cannot pass this cost on to customers.
UPI has grown rapidly since its launch in 2016. The fee is intended to help support the long-term sustainability of the payments system.
Experts have raised concerns that the additional cost could increase expenses for businesses and potentially affect UPI adoption.
The charge is known as the Merchant Discount Rate (MDR). It is intended to cover part of the costs involved in processing digital payments.
No. The government has said MDR is not a tax and is not a charge collected by the government or NPCI.
The change has opened a wider debate about how India can maintain a fast, accessible and sustainable digital payments ecosystem as UPI usage continues to grow.