Reserve Bank of India (RBI) Governor Sanjay Malhotra has said that the upcoming merchant charges on select Unified Payments Interface (UPI) transactions are unlikely to affect the growth of digital payments across the country. Speaking after the RBI’s monetary policy announcement, Malhotra stated that the Merchant Discount Rate (MDR) is only a small fee and that the central bank does not expect it to reduce UPI transaction volumes. He added that digital payment adoption remains strong despite the policy change.
Under the new payment framework, which will come into effect on October 15, a 0.4 percent Merchant Discount Rate (MDR) will be applicable on select person-to-merchant UPI transactions exceeding Rs 2,000. The government has clarified that the revised framework applies only to eligible merchant payments and will not affect person-to-person transactions, which will continue to remain completely free regardless of the transfer amount.
The RBI Governor said there has been no indication of a decline in transaction volumes since the MDR decision was announced and expressed confidence that users will continue to rely on UPI for everyday payments. Officials believe the revised framework strikes a balance between supporting the digital payments ecosystem and maintaining the convenience that has made UPI one of India’s most widely used payment platforms.
