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Finance Ministry rejects US pressure claim on 0.4% MDR
The Economic Times··18 Sept
The Finance Ministry dismissed claims that US pressure drove the 0.4 percent Merchant Discount Rate on select UPI payments. The Department of Financial Services said the September 15 NPCI circular allows only RuPay credit cards on UPI credit transactions. It called external-influence allegations false. From October 15 the MDR applies to merchant payments above Rs 2,000.
Prism
What It Means For You
- Merchants, not consumers, pay the MDR, capped at Rs 300 for transactions of Rs 75,000 or more.
- Essential services such as railways, telecom, fuel and insurance get a flat Rs 5 fee above Rs 2,000.
- Small merchants collecting up to Rs 1 lakh a month via UPI QR codes remain exempt.
What's Happening
- DFS responded to USTR 2026 report comments on US payment firms' access to UPI.
- Opposition parties including Congress had alleged the MDR followed US pressure.
- NPCI said MDR on select high-value transactions aims to fund smaller domestic app providers.
What Stays Free
- Person-to-person payments and most everyday merchant payments remain free.
- UPI QR payments to merchants in rural and semi-urban areas also stay free.
- Five percent of MDR collections are earmarked to expand acceptance among small merchants.
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