BENGALURU
CH NEWS
Deputy Chief Minister Dr G Parameshwara has opposed the introduction of a 0.4% Merchant Discount Rate (MDR) on specified UPI merchant transactions above ₹2,000, calling it a setback to India’s digital payments journey.
Under the new framework, effective October 15, 2026, person-to-merchant UPI transactions above ₹2,000 will attract an MDR, while person-to-person transactions will remain free. The MDR will be capped at ₹300 for transactions of ₹75,000 and above.
Parameshwara said UPI became widely accepted because it was simple, accessible and free, helping ordinary citizens and small businesses move away from cash.
He questioned whether additional costs imposed on merchants could eventually affect consumers through higher prices or other charges. He also argued that banks, payment companies and other intermediaries could gain new revenue streams from the MDR.
Parameshwara cited Congress leader Rahul Gandhi’s criticism that the move could benefit large financial and technology companies, while placing additional costs on Indian merchants. These are political allegations; the Union government has said the framework is intended to support the sustainability of the UPI ecosystem and that consumers will not be charged directly.
He urged the Union Government to reconsider the decision and protect affordable and accessible digital payments. The government has maintained that UPI payments up to ₹2,000 and person-to-person transactions will remain free, while specified small merchants are also exempt under the new framework.
