UPI payments above Rs 3,000 may attract charges: Report

The government is considering a proposal to bring back merchant charges on Unified Payments Interface (UPI)-based transactions above Rs 3,000, as reported by NDTV Profit on Wednesday.

ET in March had reported on banks sending a formal proposal to the Union government to bring back Merchant Discount Rates (MDR) on UPI payments for large merchants. In the earlier proposal sent by the lenders, it was suggested that the fee could be brought back for merchants with Goods and Services Tax (GST)-based annual turnover of more than Rs 40 lakh.

However, the latest report revealed that larger transactions via UPI are likely to carry a merchant fee, exempting small-ticket transactions.


MDR is the fee charged by banks to merchants for providing digital payment services. At present, RuPay debit cards and Unified Payments Interface (UPI) payments are exempted from this fee.

According to the NDTV report, a meeting in this regard was held involving the PMO, Department of Economic Affairs and the Department of Financial Services to examine the current policy framework for MDR.

The broader picture

The removal of MDR boosted UPI adoption but also cut off a key revenue stream for banks, fintech firms and payment service providers. By 2024, UPI’s transaction volume rose to 17,221 crore, while the country’s total digital payment volume reached 20,787 crore.

The total value of UPI transactions grew from Rs 5.86 lakh crore in 2018 to Rs 246.83 lakh crore in 2024, making it the most dominant payment method in India.

Senior bankers and analysts had told ET earlier that a large retail merchant usually gets more than 50% of its transactions via cards. They are already paying charges for other payments. Thus, a similar arrangement can support banks and payment providers in handling high-value digital transactions.

The Payments Council of India, an industry body representing digital payments companies, had said in a letter to the PMO on March 24 that banks, startups and payment companies collectively spend approximately Rs 10,000 crore per year and that around 20% of Indian startups are serviced via UPI.

ET has also reported that approximately 60 million merchants in the country accept digital payments, mainly UPI, and “out of this, 90% are being categorised as small merchants.”

Therefore, the zero-MDR regime is not viable in the current scenario, and the charges on high-volume UPI transactions can help recover these costs without hurting small merchants or everyday users.

Also Read: ETtech Explainer: Government mulls bringing back MDR on UPI, RuPay for large merchants—what does it mean?