They emphasised that, despite stringent criticism from the Opposition, the move will not be rolled back. Explaining the decision to impose a charge on some UPI transactions over Rs 2,000, highly placed sources have said the call was a considered one and was taken five years ago.
“The new UPI framework introduced has no impact on any person-to-person transactions. UPI will continue to remain completely free for all person-to-person transactions, irrespective of the amount transferred. The National Payments Corporation of India (NPCI) announced on Tuesday that while all transactions will remain free for consumers, some UPI payments over Rs 2,000 will attract a Merchant Discount Rate (MDR). The levy will be 0.4% for consumer-to-merchant transactions over Rs 2,000 (which works out to approximately Rs 8 for an amount of Rs 2,001) and a flat rate of Rs 5 for sectors like railways, telecom services, insurance, and fuel. Payments to merchants up to Rs 2,000, along with transactions covered under the zero-MDR framework for small merchants, will also remain free. Consequently, approximately 96% of all P2M transactions will remain unaffected. MDR will apply only to specified merchant transactions above Rs 2,000,” the finance ministry said in a statement.
Sources said on Wednesday that the decision was taken after careful consideration. “It is clarified that MDR is neither a tax nor a charge collected by the Government or NPCI. It is distributed among payment ecosystem participants, including banks and payment application providers, to support the operation and continued expansion of the UPI ecosystem. Sky-high inflation has already emptied the common person’s pocket. “Congress is once again spreading fake news. RuPay debit-card payments remain charge-free. Consumers pay zero transaction charge.
Introduced under the Payment and Settlement Systems Act, 2007, following detailed deliberations by the UPI Steering Committee, the framework seeks to ensure the long-term sustainability of UPI while protecting individuals and small merchants from additional charges,” it said. “‘No fees on UPI’ has been changed to ‘no fees on UPI transactions up to Rs 2,000’. Wholesale inflation is near 10%, and the BJP government has planned to impose a ‘Digital Payments Tax’ on the public, aiming to destroy whatever little savings they have left,” Congress President Mallikarjun Kharge said in a post in Hindi on X on Tuesday. 96% of UPI merchant (P2M) transactions are Rs 2,000 or below, and they are 100% charge-free.
“It was decided five years ago that MDR would be levied once the digital infrastructure was established,” a source said. P2P (person-to-person) UPI transactions remain completely free,” BJP Spokesperson Pradeep Bhandari said in a post on X.
