No Merchant Discount Rate will be charged on UPI transactions: Finance Ministry

Merchant Discount Rate is the cost paid by a merchant to a bank for accepting payment from their customers via digital means. Finance Ministry’s clarification comes following reports that the government is planning to impose MDR on large-ticket UPI transactions

New Delhi: The Finance Ministry has said no Merchant Discount Rate (MDR) will be levied on transactions through Unified Payments Interface platforms.

“Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading,” the Ministry said in a post on X on Wednesday.

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“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,” it said.

MDR is the cost paid by a merchant to a bank for accepting payment from their customers via digital means. The merchant discount rate is expressed in percentage of the transaction amount.

The Ministry’s clarification came following some reports that the government is planning to impose MDR on large-ticket UPI transactions.

Meanwhile, transactions through UPI touched a record high of Rs 25.14 lakh crore in May, recording a growth of 5 per cent over the preceding month, according to data released by the National Payments Corporation of India (NPCI).

The UPI transactions value was Rs 23.94 lakh crore in April. In terms of volume, 1,867.7 crore transactions were done in May against 1,789.3 crore in the previous month.

NPCI said the value of the transactions last month was 23 per cent higher as compared to Rs 20.44 lakh crore in the year-ago period.