Government clarifies UPI transaction charges and potential merchant fees
The Indian government has clarified that Unified Payments Interface (UPI) transactions will remain free for consumers and for all person-to-person transfers. Following the passage of an amendment to the Payment and Settlement Systems Act, 2007, the Ministry of Finance stated that any future Merchant Discount Rate (MDR) would apply only to a limited set of merchant transactions exceeding a specific threshold. Officials emphasized that these potential fees would be nominal and lower than those currently applied to debit or credit cards, aiming to support the long-term sustainability of the digital payment ecosystem.
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What Happened
The Ministry of Finance issued a statement confirming that UPI services will remain free for individual users following concerns raised by the passage of an amendment to the Payment and Settlement Systems Act, 2007. The government clarified that person-to-person transactions will not incur any charges. While the new legislation allows for the introduction of a Merchant Discount Rate, officials stated that such fees would only apply to a limited category of merchant transactions above a specified financial threshold.
The government described reports suggesting external pressure on policy changes as unfounded. The proposed MDR, if implemented, is intended to strengthen the infrastructure of the digital payment ecosystem and expand services into rural and semi-urban areas. The Ministry of Finance noted that any such fees would be nominal and significantly lower than the rates currently associated with traditional debit and credit card transactions.
Background
The Payment and Settlement Systems Act, 2007, provides the legal framework for the regulation and supervision of payment systems in India, including the authority to set standards for digital transactions.
Standing context, compiled from public reference sources rather than from the coverage above.
Key Facts
- The government confirmed that UPI remains free for individual consumers.Source not recorded
- Person-to-person UPI transactions will continue to be free of charge.Source not recorded
- An amendment to the Payment and Settlement Systems Act, 2007, was recently passed in the Lok Sabha.Source not recorded
- Any future Merchant Discount Rate would apply only to a limited set of merchant transactions above a specific threshold.Source not recorded
- The government stated that potential merchant fees would be lower than those for debit or credit cards.Source not recorded
- The Ministry of Finance denied that policy changes were driven by external influences.Source not recorded
About This Analysis
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