Centre Clarifies on Digital Payments

The Government of India has clarified that there is no proposal to impose charges on Unified Payments Interface (UPI) transactions. The Finance Ministry dismissed reports suggesting that Merchant Discount Rate (MDR) would be levied on UPI payments exceeding ₹3,000. It reiterated that digital payments will continue to remain free for users. As per Section 10A of the Payments and Settlement Systems Act, 2007, banks and service providers are not allowed to levy any charges on UPI transactions. Notifications by the Central Board of Direct Taxes (CBDT) also mandate zero MDR on BHIM-UPI, UPI QR, and RuPay debit card transactions.

However, certain categories of transactions may attract specific charges. For instance, transactions above ₹2,000 made through prepaid payment instruments (wallets) using UPI may incur an interchange fee of up to 1.1 percent. Similarly, payments made via RuPay credit cards linked to UPI will attract applicable credit card MDR charges. Despite these exceptions, the government emphasized that standard UPI transactions for users will remain free and continue to drive digital payment adoption.