India to charge some merchants up to Rs300 for UPI transactions over Rs2,000

According to the Khaleej Times, the National Payments Corporation of India (NPCI) has introduced a revised framework for Unified Payments Interface (UPI) transactions. Under the new guidelines, merchants may be charged a Merchant Discount Rate (MDR) of up to 0.4 per cent for transactions exceeding Rs 2,000. This adjustment is part of an evolving strategy to manage the operational costs associated with the country's rapidly expanding digital payment infrastructure.

Despite the introduction of these charges for merchants, the policy ensures that the end-user experience remains unchanged. Consumers will continue to conduct UPI transactions free of cost, maintaining the platform's accessibility for everyday retail and peer-to-peer payments. The move is seen as a way to balance the sustainability of digital payment providers with the widespread adoption of the UPI system across India's merchant network.

The UPI system has become the backbone of India's digital economy, facilitating billions of transactions monthly. By implementing a tiered fee structure for higher-value transactions, regulators aim to address the financial burden on payment service providers while protecting the zero-cost model for individual consumers. Further details regarding the implementation timeline and specific merchant categories affected are expected to be clarified by the NPCI as the framework is rolled out.