RBI chief sees limited UPI impact from new merchant fee

Reserve Bank of India Governor Sanjay Malhotra said he does not expect a newly permitted merchant discount rate on some higher-value Unified Payments Interface transactions to materially reduce payment volumes. He said the central bank had seen no decline so far, while emphasizing that the effect of the fee after it takes effect remains unknown. The reported framework allows a 0.4% MDR on eligible UPI merchant transactions above Rs 2,000, beginning October 15. The fee applies to person-to-merchant payments, rather than all UPI transfers. Malhotra told reporters at the RBI headquarters that he did not think a small fee would have a major impact on transaction volumes. The governor’s assessment is a forecast, not a measure of the fee’s impact after implementation. The October 15 start date is still ahead, and the material provided does not include post-launch transaction data. Whether payment volumes change, and by how much, will therefore require later figures for the affected category. The National Payments Corporation of India says UPI transactions up to Rs 2,000 are not affected and account for more than 95% of person-to-merchant transaction volume.