Proposed 0.4% UPI merchant fee will not be passed to consumers: Report

New Delhi: The proposed merchant fee of 0.4 per cent on UPI transactions above Rs 2,000 will not be passed on to consumers, government sources said on Thursday.

Earlier in the day, National Payments Corporation of India (NPCI) Managing Director and CEO Dilip Asbe said about 10 per cent of the overall value of UPI transactions could face the risk of charges being passed on to consumers under the merchant discount rate (MDR).

Also Read: Proposed 0.4% UPI MDR could recover Rs 15,000 crore in first year: NPCI chief


The sources said not a "single penny" from the proposed MDR will go to the government coffers.

The amount will be shared among banks and other entities in the UPI ecosystem, they added.

MDR levy of 0.4 per cent on UPI transactions above Rs 2,000 will not be passed on to the consumers. Banks, as well as the Indian Banks' Association, will address misconceptions related to MDR charges and their impact on users, they said.

Also Read: SBI expects surplus from new UPI MDR as issuing, acquiring bank

The sources further said that fear of consumers shifting back to cash due to merchant fee on UPI is misplaced.

They are also hopeful that the GST Council will review the 18 per cent GST on merchant fee on UPI transaction of over Rs 2,000.

"IBA will soon run an awareness campaign to dispel various misconceptions and rumours about levy of 0.4 per cent MDR on UPI transactions above Rs 2,000," they said.