‘False, baseless, and misleading’: Finance ministry denies claims on MDR charges on large UPI transactions

Amid growing speculation that banks could soon begin charging a Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions, the finance ministry Wednesday firmly denied any such move, calling the claims “false, baseless, and misleading.”

The buzz stemmed from reports suggesting that the finance ministry and the Reserve Bank of India (RBI) were considering allowing MDR collection—but only from large merchants—as a possible way to help banks monetise the UPI infrastructure.

However, the finance ministry took to X to set the record straight. “Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading. 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,” the ministry stated.

This clarification comes at a time when the digital payments ecosystem has been under pressure to find sustainable revenue models, especially for banks and payment service providers, who currently earn little to nothing from UPI payments. Despite this, the government has kept UPI free for users and merchants to accelerate the adoption of digital transactions.

To promote the payment ecosystem, the Narendra Modi-led Centre has approved a ₹1,500-crore incentive scheme for FY25 for low-value BHIM-UPI (P2M) transactions and boost digital payments among small merchants. Launched on March 19, the initiative aims to keep the UPI ecosystem affordable and accessible for all users.