No charges on UPI transactions up to Rs 2,000; govt yet to decide on MDR for higher-value payments - The Hindu

**No charges on UPI transactions up to Rs 2,000; government yet to decide on MDR for higher‑value payments**

The Ministry of Finance has confirmed that all Unified Payments Interface (UPI) transactions valued at Rs 2,000 or less will continue to be free for consumers. The move, first announced in the Union Budget, extends the zero‑fee regime that was introduced in 2020 for low‑value digital payments and is intended to boost adoption among small merchants and everyday shoppers. The policy applies to all UPI‑enabled banks and payment service providers, and the waiver will remain in effect until at least the end of the fiscal year 2026‑27.

For transactions that exceed the Rs 2,000 threshold, the government has not yet fixed a final merchant discount rate (MDR). A banking‑sector panel, chaired by the Reserve Bank of India, is expected to convene in the coming weeks to recommend a rate. Media reports, including NDTV and *The Economic Times*, suggest that the panel may settle on a 0.4 % MDR for higher‑value payments, a modest increase from the 0.3 % rate that currently applies across the board. The final decision will affect merchants who accept UPI, as they would need to absorb the cost or pass a marginal increase onto consumers.

The proposal has sparked political debate. Opposition leader Rahul Gandhi criticised the move as evidence that Prime Minister Narendra Modi is “yielding to U.S. pressure,” framing the MDR discussion as a surrender of India’s financial sovereignty. The ruling party, however, maintains that a differentiated MDR structure is necessary to sustain the ecosystem’s growth while safeguarding the interests of small businesses. As the panel deliberates, stakeholders from fintech firms to trade associations are lobbying for a rate that balances profitability with the inclusive ethos that has made UPI one of the world’s most widely used payment systems.