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Bad news for Google Pay, PhonePe and Paytm users: If you are an UPI user, here is a news update that may concern you. We all know that using the services of Unified Payment Interface, introduced by the National Payments Corporation of India is free for customers in India but media reports had earlier reported that the Government of India is considering the introduction of Merchant Discount Rate (MDR) charges on UPI transactions exceeding Rs 3,000.
Reversing the ‘zero‑MDR’ policy which was in place since January 2020, the Modi government is reportedly planning to charge Merchant Discount Rate (MDR) on transactions above Rs 3000 through UPI. Readers should note that the MDR is only applicable on Banks and not customers.
“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 government remains fully committed to promoting digital payments via UPI,” the ministry stated rejecting the claims.
For those unversed, Merchant Discount Rate (MDR) is the fee charged by a bank or payment gateway to a merchant for processing credit or debit card payments and government had removed it for UPI promotion but as of now, it is reportedly considering introducing 0.2–0.3% MDR for large merchants, which may further promote infrastructure development in UPI services.
In a significant good news for growth of UPI, the Unified Payments Interface (UPI) has posted a robust recover in the month of May by processing 18.68 billion transactions, up from 17.89 billion in April. As per data by the National Payments Corporation of India (NPCI), the UPI transactions mark a 33 per cent year-on-year (YoY) surge compared to 14.03 billion transactions in the same month last year.
The UPI transactions rose to Rs 25.14 lakh crore (by value) last month, a 5 per cent increase from Rs 23.95 lakh crore in April. This reflects a 23 per cent rise from Rs 20.45 lakh crore in May last year. The average daily transaction volume stood at 602 million, while the average daily transaction value reached Rs 81,106 crore.
The UPI has 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.
(With inputs from agencies)
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