“We are in touch with payment aggregators. The rollout would be closely monitored,” an official said, adding that MDR is necessary to help the fintech ecosystem sustain and grow.
The official said any issue with regard to levy of goods and services tax on MDR can be taken up by the GST Council. He said input tax credit can be used by merchants to offset their tax liability.
Since transactions below ₹2,000 have been exempted from the levy of MDR, small merchants would not face GST, he said.
The government in a statement said the reintroduction of MDR on , or , transactions is a step in protecting the country’s sovereignty in the electronic payment ecosystem, rejecting charges by opposition that levy had been introduced under external influence.
Also read |
“Contrary to misleading claims that MDR has been introduced under external pressure, introduction of MDR on select high-value transactions will enable more domestic companies to operate under United Payment Interface,” a finance ministry statement said.
It said the government has promoted RuPay credit and debit cards to show that people have a strong domestic alternative. “In order that the RuPay credit cards continue to grow, the debit card has been kept free of MDR,” it added.
On allegations that the MDR has been introduced because of external pressure, citing an US Trade Representative (USTR) report of 2026, the ministry said there is a clear policy of only allowing RuPay credit card on UPI to enable RuPay credit card to become the preferred choice of credit card amongst users in India. “Had the government been under pressure, it would have allowed foreign cards to use UPI, a key issue flagged in the report,” an official said, adding that while RuPay debit card payments will not face MDR, those by foreign debit cards would.
Also read |
On the issue of the National Payment Corporation of India (NPCI) market-share limitation of 30% for third-party application providers, the ministry stated that while NPCI had mandated market share limitation of 30% for third-party application providers in November 2020, this mandate could not be implemented because companies other than the market leaders could not compete in absence of self-sustaining revenue model.
“Introduction of MDR on select high-value transactions will provide a self-sustaining revenue model to smaller companies to compete for higher share in the UPI ecosystem,” it said, adding that the introduction of MDR would allow more domestic companies to expand their operations.
On Monday, the government issued a notification that all RuPay debit card transactions and UPI payments up to ₹2,000 will be exempt from any direct or indirect charges by banks or system providers.
Subsequently, NPCI announced a MDR of 0.4% on person-to-merchant (P2M) UPI transactions above ₹2,000. For transactions of ₹75,000 and above, the MDR will be capped at ₹300 per transaction.
as a Reliable and Trusted News Source
(You can now subscribe to our )