No MDR on UPI transactions: Finance Ministry calls reports 'false and misleading'
Several reports had speculated about the reintroduction of MDR charges on UPI transactions exceeding Rs 3,000, a measure purportedly aimed at alleviating financial stress on banks and payment service providers.
- Jun 12, 2025,
- Updated Jun 12, 2025 4:39 PM IST
The Ministry of Finance has categorically denied recent reports suggesting that Merchant Discount Rates (MDR) will soon be imposed on Unified Payments Interface (UPI) transactions. The ministry described such claims as "false, baseless, and misleading," emphasizing that there is no intention to introduce these charges, which would increase transaction costs for users.
Several reports had speculated about the reintroduction of MDR charges on UPI transactions exceeding Rs 3,000, a measure purportedly aimed at alleviating financial stress on banks and payment service providers. However, the Ministry of Finance clarified these speculations as unfounded, stressing that such "baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens."
The ministry's statement aims to reassure the public and stakeholders about the government's unwavering support for the digital economy, which is pivotal for the nation's economic growth.
The ministry said the government remains steadfast in its commitment to ensuring that digital transactions remain accessible and affordable for all citizens, thereby fostering greater financial inclusion. This assurance is crucial as digital payments become an integral part of daily life for millions.
The context for these rumours stemmed from a letter by the Payments Council of India (PCI) to the government, advocating for the removal of the Zero MDR policy that has been in place since January 2020. The PCI's proposal included a nominal MDR of 0.3% for larger merchants using UPI, reflecting ongoing financial challenges faced by payment service providers, as the government’s Rs 1,500 crore incentive is deemed insufficient against the estimated Rs 10,000 crore needed for UPI infrastructure maintenance. This highlights the financial strain on providers and the need for sustainable funding solutions, which are essential for the continued expansion of digital payment systems.
In response to these challenges, the Ministry of Finance reiterated its dedication to fostering digital payments via UPI, stating that "The Government remains fully committed to promoting digital payments via UPI." The government continues to invest in expanding the digital infrastructure necessary for UPI's growth, which has seen a remarkable increase in transaction volume, reaching a record 18.68 billion transactions worth Rs 25.14 lakh crore in May alone. This growth is a testament to the system's efficiency and the trust users place in digital transactions, which are becoming more prevalent with each passing year.
The commitment to UPI is underscored by its significant growth, with a 33% year-on-year increase in transaction volume from May of the previous year. The fiscal year 2023-24 alone recorded over 131 billion transactions, surpassing Rs 200 lakh crore in value. The government's stance, as articulated, aims to dispel any doubts regarding the future cost of UPI transactions, maintaining its role as a key driver of digital financial inclusion in India. This growth trajectory not only highlights the increasing reliance on digital payments but also underscores the government's strategic focus on enhancing financial accessibility and convenience for all citizens.
The Ministry of Finance has categorically denied recent reports suggesting that Merchant Discount Rates (MDR) will soon be imposed on Unified Payments Interface (UPI) transactions. The ministry described such claims as "false, baseless, and misleading," emphasizing that there is no intention to introduce these charges, which would increase transaction costs for users.
Several reports had speculated about the reintroduction of MDR charges on UPI transactions exceeding Rs 3,000, a measure purportedly aimed at alleviating financial stress on banks and payment service providers. However, the Ministry of Finance clarified these speculations as unfounded, stressing that such "baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens."
The ministry's statement aims to reassure the public and stakeholders about the government's unwavering support for the digital economy, which is pivotal for the nation's economic growth.
The ministry said the government remains steadfast in its commitment to ensuring that digital transactions remain accessible and affordable for all citizens, thereby fostering greater financial inclusion. This assurance is crucial as digital payments become an integral part of daily life for millions.
The context for these rumours stemmed from a letter by the Payments Council of India (PCI) to the government, advocating for the removal of the Zero MDR policy that has been in place since January 2020. The PCI's proposal included a nominal MDR of 0.3% for larger merchants using UPI, reflecting ongoing financial challenges faced by payment service providers, as the government’s Rs 1,500 crore incentive is deemed insufficient against the estimated Rs 10,000 crore needed for UPI infrastructure maintenance. This highlights the financial strain on providers and the need for sustainable funding solutions, which are essential for the continued expansion of digital payment systems.
In response to these challenges, the Ministry of Finance reiterated its dedication to fostering digital payments via UPI, stating that "The Government remains fully committed to promoting digital payments via UPI." The government continues to invest in expanding the digital infrastructure necessary for UPI's growth, which has seen a remarkable increase in transaction volume, reaching a record 18.68 billion transactions worth Rs 25.14 lakh crore in May alone. This growth is a testament to the system's efficiency and the trust users place in digital transactions, which are becoming more prevalent with each passing year.
The commitment to UPI is underscored by its significant growth, with a 33% year-on-year increase in transaction volume from May of the previous year. The fiscal year 2023-24 alone recorded over 131 billion transactions, surpassing Rs 200 lakh crore in value. The government's stance, as articulated, aims to dispel any doubts regarding the future cost of UPI transactions, maintaining its role as a key driver of digital financial inclusion in India. This growth trajectory not only highlights the increasing reliance on digital payments but also underscores the government's strategic focus on enhancing financial accessibility and convenience for all citizens.