UPI users are not being charged 0.4%.
From October 15, the new MDR framework applies mainly to qualifying merchant payments above ₹2,000. P2P transfers remain free, lower-value merchant payments stay outside the standard MDR, and eligible small merchants continue under zero-MDR treatment.
The bigger change is on the merchant side.
For qualifying transactions, MDR creates a direct payment-processing cost. The idea is to support the economics of running large-scale payment infrastructure — including reliability, fraud controls, security, reconciliation, and support.
But this also creates a trade-off.
Even when consumers are not directly charged, merchant payment costs can still influence margins, discounts, pricing, or preferred payment methods over time.
So the real question is not simply:
Should UPI be free or paid?
It is:
Who should ultimately bear the cost of running and improving such a large digital-payment ecosystem?
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