New 0.4% Charge on Transactions Above ₹2,000 Caps Merchant Costs at ₹300
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims·
Why in news
The Indian government introduced a new UPI Merchant Discount Rate (MDR) framework effective October 15 to impose a 0.4% charge on merchant transactions exceeding ₹2,000.
Background
The new framework imposes a 0.4% charge on merchant transactions above ₹2,000, with a maximum cap of ₹300 per transaction. Person-to-person (P2P) and person-to-merchant (P2M) transactions up to ₹2,000 remain free of charges.
Facts for Prelims
- FactUPI MDR charge: 0.4% for transactions above ₹2,000
- FactMaximum cap on merchant transaction charge: ₹300
- BodyNPCI: National Payments Corporation of India, the body clarifying the new framework
- FactFree transaction limit: P2P and P2M transactions up to ₹2,000
For Mains
Q. Discuss how the introduction of Merchant Discount Rates (MDR) on high-value UPI transactions balances the sustainability of digital payment infrastructure with financial inclusion goals.
Dimensions to cover in your answer
- Infrastructure sustainability: Balancing the cost of maintaining high-volume digital payment rails with the need for zero-cost consumer access
- Digital divide mitigation: Ensuring small merchants and low-value transactions remain exempt to promote grassroots financial inclusion
Keywords: Digital Public Infrastructure · Financial Inclusion · Merchant Discount Rate · Payment Systems · Monetary Policy
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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.