The Union Finance Ministry has strongly denied reports suggesting that the government is planning to impose a Merchant Discount Rate (MDR) on large-value Unified Payments Interface (UPI) transactions. In an official statement released on the social media platform X, the ministry labelled such claims as "false, baseless and misleading."
"Speculation and claims that the MDR 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 ministry clarified.
The ministry reaffirmed its commitment to promoting digital payments and reiterated that the government remains fully supportive of the zero-MDR policy on UPI transactions, which has been in place since January 2020.
The clarification comes in response to recent media reports suggesting that the government was considering allowing MDR charges on UPI transactions above Rs 3,000, purportedly to aid the financial sustainability of banks and payment service providers. Some of these reports claimed that the government may shift MDR calculation to the transaction value rather than merchant turnover.
Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading.
— Ministry of Finance (@FinMinIndia) June 11, 2025
Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens.
The Government remains fully committed…
Industry Concerns Over Zero MDR Policy
Earlier this year, the Payment Council of India (PCI) had written to the government urging a review of the zero-MDR policy, citing financial strain on stakeholders within the digital payments ecosystem. According to the PCI, the annual cost of maintaining and expanding UPI infrastructure is estimated to be around Rs 10,000 crore, while the current government allocation of ₹1,500 crore falls significantly short of bridging the gap.
As a solution, the PCI proposed introducing a nominal MDR of 0.3% on UPI transactions for large merchants and permitting MDR charges on RuPay debit card transactions for all merchants.
UPI: The Backbone of India's Digital Payments
Despite the financial concerns raised by industry bodies, UPI continues to dominate India's digital payments landscape. Government data shows that UPI accounted for over 80% of retail digital transactions in FY 2023-24, with more than 131 billion transactions conducted, valued at over Rs 200 lakh crore.
UPI also recently surpassed global giant Visa in daily transaction volume, clocking 644 million transactions on June 1 and 650 million on June 2-surpassing Visa's FY24 daily average of 639 million transactions.
Government Stands Firm
The finance ministry's prompt rebuttal is aimed at curbing misinformation and maintaining public trust in the government's digital payment initiatives. Officials reiterated that the goal remains to make digital transactions accessible, affordable, and inclusive for all citizens.
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