Good update. I'm more in favour of keeping the ecosystem flexible on mdr with flat fees for large transactions, but here is another thought: Make neft/rtgs/imps accept qr driven. Every bank app should read a qr format that automatically launches their transfer money part (after login) which allows instant transfers through imps or the rtgs or NEFT modes, which typically needs an otp to complete. Banks must show the charges applicable to the customer if any. Merchants can display this alongside their upi qr codes. This is always free for the merchant and they can even charge lower for direct account payments. Upi actually has an address format for direct account transfers, they could reuse that. Then yes mdr on upi is ok for large transactions, since there is an easy payment mode for the large ones outside upi and provides competition (and even utilities , schools etc can give a free payment mode to people)
There has been considerable discussion around UPI and merchant charges. Here are the facts behind the conversation what it means for consumers, merchants, and India's digital payment ecosystem. 1. Will I have to pay to use UPI? No. UPI has always been free for consumers since its launch in 2016. Every Indian can continue making instant digital payments without paying any transaction charges. 2. Will small shopkeepers or kirana stores be charged for accepting UPI? No. Small merchants are not required to pay any charges (MDR) to accept UPI payments. UPI was designed to make digital payments accessible for even the smallest businesses across India, and protecting small merchants remains central to the ecosystem's inclusive growth. 3. Why is there a discussion around UPI charges now? UPI has evolved from a new payment platform into the world's largest real-time payment system. As the ecosystem continues to expand, discussions are taking place on how to sustainably support the infrastructure that enables billions of secure transactions every month, while continuing to ensure that consumers and small merchants remain protected. 4. Who built and continues to invest in UPI? For nearly 10 years, banks, payment companies, fintechs, NPCI and RBI have collectively invested in technology, cybersecurity, fraud prevention, innovation and customer support to build one of the safest and most reliable payment systems in the world. These investments continue every day to keep UPI secure, resilient and available 24×7. 5. If UPI is free, who bears the cost of operating it? Operating a national payment infrastructure involves continuous investment in technology, fraud prevention, cybersecurity, compliance, customer support and innovation. These costs are currently borne by ecosystem participants including banks and payment service providers who continue to invest so consumers can enjoy a safe, secure and seamless payment experience. 6. Would consumers have to pay if large merchants pay for payment acceptance? No. Merchant service charges, where applicable, are commercial arrangements between merchants and payment service providers. They do not mean that consumers pay to use digital payments. Across the world, merchant service charges are a standard feature of digital payment ecosystems, while consumers continue to enjoy convenient and secure digital payment experiences. 7. Why is sustaining the UPI ecosystem important? UPI has become critical national digital infrastructure used by hundreds of millions of Indians every day. As transaction volumes continue to grow, sustained investment in security, resilience, innovation, fraud prevention and infrastructure will remain essential to ensure that UPI continues to serve consumers and businesses reliably for years to come. @FinMinIndia @DFS_India @nsitharamanoffc
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