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UPI Charges Rumors Refuted by Finance Ministry

The Finance Ministry has firmly rejected rumors about potential charges on UPI transactions, labeling them as false and misleading. This clarification comes amidst speculation that Merchant Discount Rate (MDR) fees might be applied to high-value UPI transactions. UPI has gained immense popularity in India due to its free service model since launch. The Ministry emphasized its commitment to promoting digital payments through UPI, aiming to alleviate any uncertainty among citizens. Understanding the implications of MDR, which is a fee charged by banks for processing payments, is crucial as it continues to apply to credit card transactions. This article delves into the details surrounding UPI and the government's stance on maintaining its accessibility.
By Narendra Chaudhary | Jun 12, 2025, 12:04 IST
UPI Charges Rumors Refuted by Finance Ministry

Clarification on UPI Charges

Recent media speculation suggested that the Unified Payments Interface (UPI) might incur higher costs due to potential Merchant Discount Rate (MDR) fees on substantial transactions, which could impact its widespread use. UPI has become a favored payment method in India, primarily because it has been free since its inception, making it one of the leading real-time payment solutions.


In response, the Finance Ministry has categorically rejected these claims, labeling them as false and misleading, and has reiterated its dedication to fostering digital payments through UPI.


This official statement follows various reports indicating that MDR would be imposed on larger UPI transactions.


The Ministry of Finance tweeted, "Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading. Such unfounded and sensational claims create unnecessary uncertainty, fear, and suspicion among our citizens. The Government remains fully committed to promoting digital payments via UPI."



Understanding MDR


MDR, or Merchant Discount Rate, refers to the fees that banks charge merchants for processing instant payments. Previously, merchants faced a 1% MDR on card transactions, but in 2020, the government eliminated MDR charges for debit cards to encourage digital transactions.


MDR continues to apply to most credit card transactions, with rates varying from 1% to 3%, depending on the type of card, transaction amount, and merchant category.


It's important to note that the Unified Payments Interface is overseen by the National Payments Corporation of India (NPCI) and is currently the most utilized payment platform in the country.


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