Government Proposes MDR on UPI Transactions Above Rs 2,000

The government proposed a Merchant Discount Rate of 0.25% to 0.5% on UPI transactions exceeding ₹2,000 through an amendment to Section 10A of the Payment and Settlement Systems Act, 2007.

While the threshold is officially stated to spare milk-and-vegetable payments and cover about 5% of transaction volume, it encompasses roughly 65% of total transaction value.

The proposed fee structure reverses a decade-long zero-MDR policy established after demonetization in 2016 to encourage digital payments.