Your shopping bills might get slightly higher this festive season as retailers consider raising prices or offering fewer discounts to offset a new fee on high-value UPI transactions.
From October 15, a 0.4% (MDR) will apply to UPI payments above ₹2,000, capped at ₹300 per transaction. While the government has specifically stated that the charge cannot be passed directly on to consumers, retailers are still considering adding an additional cost that could influence final prices.
For example, if a customer pays ₹10,000 for a purchase through UPI, the merchant-level charge would be ₹40. Similarly, for a ₹50,000 transaction, it would be ₹200 (depending on the applicable cap).
Whether your bill will increase depends on whether a business passes the costs on to customers.
Govt sets 0.4% fee on UPI payments above ₹2,000
Ending nearly six years of a fully free (UPI) network for merchants, the government on Tuesday introduced a 0.4 per cent transaction fee on payment above ₹2,000, capped at ₹300 for payments of ₹75,000 and above, from October 15, while explicitly ring-fencing everyday person-to-person transfers from any charge.
The carefully calibrated move signals the end of an era for the world’s largest real-time payments system even as the government tries to avoid alarming the hundreds of millions of users who use it daily.
Person-to-person (P2P) transfers – which make up 37 per cent of UPI’s transaction volume and 70 per cent of its transaction value – will continue to attract zero charges, irrespective of size. Small-value transactions up to ₹2,000, which the government said account for more than 95 per cent of total P2M volume, remain untouched.
“Charges will apply only to person-to-merchant (P2M) transactions exceeding ₹2,000,” the finance ministry said in a statement. “A nominal merchant discount rate (MDR) of 0.4 per cent will be levied on P2M transactions above ₹2,000. This commission will be shared amongst the payment ecosystem partners including banks and app providers.”
In August, UPI processed a total of 24.5 billion transactions worth 29,823 billion rupees for more than 550 million users, official data show.
has a share of 84% in India’s digital payments by volume and a 49% share of global real-time payment volumes, the government said on Tuesday.
Walmart’s PhonePe and Alphabet’s GooglePay had about 80% market share by value of UPI transactions in August.