No merchant discount rate on UPI transactions

New Delhi: The government is fully committed to promoting digital payments via Unified Payment Interface (UPI), the finance ministry said Wednesday, adding there will be no merchant discount rate (MDR) on UPI transactions.

MDR is a rate charged to a merchant for the payment processing of debit and credit card transactions.

"Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless and misleading," it said in a statement, adding that such speculations cause needless uncertainty, fear and suspicion among the citizens.


To promote digital transactions, MDR was made zero from January 2020 for RuPay debit cards and BHIM-UPI transactions through amendments in Section 10A of the Payments and Settlement Systems Act, 2007 and Section 269SU of the Income Tax Act, 1961. To support the payment ecosystem participants in effective delivery of services, "Incentive scheme for promotion of RuPay debit cards and low-value BHIM-UPI transactions (P2M)" has been implemented, the government said in March. Only UPI (P2M) transactions up to ₹2,000 for small merchants are covered under the scheme.