Government says proposed UPI fee will not reach consumers

Government sources say a proposed 0.4% merchant discount rate on some Unified Payments Interface transactions above ₹2,000 will not be passed on to consumers, as the National Payments Corporation of India’s chief warned that some charges could still reach them. The fee is intended for eligible merchant payments, while most UPI transaction volume is not expected to attract a charge, according to NPCI Managing Director and CEO Dilip Asbe. Government sources said the proposed MDR would be distributed within the UPI ecosystem, including to banks, and would not generate revenue for the government. They said banks and the Indian Banks Association would explain the fee and its expected consumer impact. The government is also hopeful that the GST Council will review the 18% GST on merchant fees for UPI transactions above ₹2,000, but no review decision was reported. Asbe said about 10% of the overall value of UPI transactions could face a risk of MDR costs being passed on to consumers. He said 96% of transaction volume and 75% of transaction value were not expected to attract charges.