UPI charges were ‘baseless’. Now they’re 0.4%
The Centre denied MDR speculation in June 2025. In September 2026, it approved MDR on specified merchant UPI payments above ₹2,000.
The Centre’s June 2025 denial preceded a September 2026 framework allowing charges on specified merchant UPI payments.
The Modi government called reports of UPI charges “completely false, baseless, and misleading” in June 2025. Fifteen months later, the Finance Ministry has announced a framework allowing a 0.4% merchant discount rate on specified person-to-merchant UPI transactions above ₹2,000. The word “false” has had a busy year.
The September 15 release says person-to-person payments will remain free, while MDR on transactions of ₹75,000 and above will be capped at ₹300. Railways, telecom, insurance, fuel and agricultural-input payments above ₹2,000 will attract a flat ₹5 charge. Capital-market payments will attract 0.02%, capped at ₹300. Small merchants receiving up to ₹1 lakh a month through UPI QR codes under the P2PM category remain exempt. The government says about 96% of merchant transactions will be unaffected.
The Centre says the charge will be shared within the payment ecosystem, not collected as a government tax, and that merchants must not pass it to customers. It has not published, in the material reviewed, the enforcement mechanism or the underlying data for the 96% estimate. What it did publish in 2025 was a categorical denial. What it has published now is a framework doing the narrower version of what it denied.