If you regularly use UPI for payments, there’s important news for you. The government is considering introducing a charge on UPI transactions above ₹3,000.
This charge could come in the form of MDR (Merchant Discount Rate). Currently, under the Zero MDR policy, neither customers nor merchants pay any fee for UPI payments. But this may soon change—only for high-value transactions.
What Is MDR?
MDR (Merchant Discount Rate) is a fee that banks or UPI apps charge merchants whenever a customer pays through UPI.
So far, UPI payments have been completely free for both users and traders. But under the new proposal, MDR may apply only to transactions above ₹3,000.
This means you can still use UPI for small purchases like vegetables, groceries, milk, or food without any additional charge.
Why Is the Government Planning This?
The government aims to give banks and UPI service providers a sustainable source of revenue. With the rapid rise in digital payments, maintaining the UPI infrastructure is becoming costly.
The Payment Council of India has also suggested ending the Zero MDR policy for high-value transactions.
UPI Usage is Soaring
The number of UPI transactions is rising sharply in India:
On June 1, 2025, UPI handled 644 million (64.4 crore) transactions.
On June 2, 2025, this increased to 650 million (65 crore).
To compare, Visa’s daily global transactions are estimated at 639 million. In May 2025 alone, India recorded over 14 billion UPI transactions, worth more than ₹20 lakh crore.
What Happens Next?
The proposed MDR fee will only apply to large transactions and will not affect everyday users.
The idea is to strengthen the digital payment ecosystem while ensuring that UPI remains free for small payments.
The government is still in the early discussion phase, and it plans to consult with merchants and payment service providers before making a final decision.
Bottom Line
UPI payments below ₹3,000 will stay free.
For payments above ₹3,000, a small MDR charge may be introduced.
The goal is to make UPI sustainable while keeping it accessible for the general public.
Let me know if you’d like a quick summary for social media or a chart showing how MDR could work.
