Finance Ministry says no plan to levy MDR charge on UPI transactions

New Delhi, June 11 : The Finance Ministry on Wednesday said that “speculation and claims that the MDR (merchant discount rate) will be charged on UPI transactions are completely false, baseless, and misleading”. “Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens.

The Government remains fully committed to promoting digital payments via UPI,” the Finance Ministry stated. The official rebuttal was issued following several reports circulated online claiming that the government was planning to impose MDR on large-ticket UPI transactions. MDR is a fee that banks charge merchants for processing payments in real time. Earlier, merchants used to pay an MDR fee amounting to 1 per cent of the total transaction value on card payments. But in 2020, the government waived off MDR charges to promote digital payments in the country.

Meanwhile, UPI processed 18.68 billion transactions in May, according to data released by NPCI on Sunday. In value terms, UPI transactions totalled Rs 25.14 lakh crore in May, up from Rs 23.95 lakh crore in April, according to data released by NPCI on Sunday. The May figures also mark a 33 per cent year-on-year jump in transaction volume, compared to 14.03 billion transactions recorded in the same month last year. The average daily transaction amount for May stood at Rs 81,106 crore, while the average daily transaction volume was 602 million.

The Unified Payments Interface (UPI) strengthened its dominance in India’s digital payments system with its share in the total transaction volume rising to 83.7 per cent in 2024-25 from 79.7 per cent in the previous financial year. The RBI’s annual report shows that UPI facilitated 185.8 billion transactions during 2024-25, which represents a 41 per cent year-on-year increase. In value terms, UPI transactions rose to Rs 261 lakh crore from Rs 200 lakh crore in FY24.

“The success of UPI placed India in a leadership position with a share of 48.5 per cent in global real-time payments by volume,” the RBI said. Total digital payments in the country, including transactions through payment systems, card networks, and prepaid payment instruments (PPIs), grew 35 per cent to 221.9 billion in FY25, from 164.4 billion transactions in FY24. In value terms, total digital payments surged 17.97 per cent to Rs 2,862 lakh crore..