India's Ministry of Finance denies foreign interference in UPI MDR policy

India's Ministry of Finance has rejected claims that the introduction of a Merchant Discount Rate (MDR) for the Unified Payments Interface (UPI) is the result of foreign interference. The Ministry stated on social media that decisions regarding India's digital payment system are made independently to create a self-reliant, inclusive, and affordable ecosystem.

Under the new framework, UPI remains free for customers for peer-to-peer transfers and standard merchant payments. However, a small fee will be applied to certain high-value merchant transactions to fund infrastructure, cybersecurity, and support for small businesses in rural and tier-3 or tier-4 cities.

Specifically, merchants will face a 0.4 percent charge on transactions exceeding 2,000 rupees. For sectors such as railways, fuel, telecom, and insurance, a flat fee of 5 rupees applies to transactions over 2,000 rupees. Payments for mutual funds and securities will incur a 0.02 percent charge, capped at 300 rupees.