The Government has put the responsibility of UPI MDR on the Banks. Government will meet Indian Banks’ Association (IBA) and create a mechanism to ensure that the MDR Charges on UPI are paid by merchants and not by consumers.
Recently the Government has introduced MDR on UPI payments above Rs 2000 and there is fear among the consumers that this charge will have to be paid by them.
While the government has said that MDR Charges will be paid by merchants, the public is demanding strict regulations for it because now also, consumers pay the 2% extra charges for paying via debit/credit card at the merchant stores.
Recently, the Finance Minister also said in a video that it will be the responsibility of banks to ensure that MDR Charges are not paid by consumers.
Awareness Campaigns for Merchants and Consumers
The IBA is expected to conduct awareness campaigns for merchants and consumers. These campaigns will explain how the new MDR system works and make it clear that merchants should not recover the MDR amount from customers.
The proposed mechanism is intended to ensure that the government’s position on consumer protection is followed in actual transactions.
No Change in MDR Framework
The government is not currently considering any change to the MDR framework, according to the sources. The Finance Ministry also has no proposal at present to exempt UPI transactions from MDR in any essential sector, including fuel.
Concerns raised by Public
The development comes after concerns were raised by traders and petrol pump dealers about the possible impact of MDR on their businesses. The Finance Ministry is expected to hold discussions with traders, including the Confederation of All India Traders (CAIT), to explain the MDR framework and reiterate that merchants should not pass the cost on to consumers.
Petrol pump dealers have separately raised concerns with the Ministry of Petroleum and Natural Gas about the impact of MDR on their businesses. They have pointed out that the additional charge could affect their already limited profit margins. According to the sources, the Petroleum Ministry will look into these concerns.
New UPI MDR Rates
Under the new MDR framework, a 0.4% charge will apply to specified person-to-merchant UPI transactions above ₹2,000. Certain essential and low-margin sectors, including fuel, will have a flat MDR of ₹5 for transactions above the threshold. The new framework is scheduled to come into effect from October 15, 2026.
