Business News | RBI Backs Government’s MDR Framework, Calls It ‘important Step’ Towards Sustainable UPI Ecosystem
Get latest articles and stories on Business at LatestLY. The Reserve Bank of India (RBI) has backed the government’s latest Merchant Discount Rate (MDR) framework for UPI merchant transactions, calling it an “important step” towards strengthening the long-term sustainability of India’s digital payments ecosystem.
New Delhi [India], September 16 (ANI): The Reserve Bank of India (RBI) has backed the government’s latest Merchant Discount Rate (MDR) framework for UPI merchant transactions, calling it an “important step” towards strengthening the long-term sustainability of India’s digital payments ecosystem.
Taking to its official X account, the apex bank noted that the introduction of MDR on UPI merchant transactions above Rs 2,000 will support the long-term sustainability of India’s digital payments ecosystem.
“The introduction of MDR on large-value UPI transactions (i.e., above ₹2,000) is an important step towards strengthening the long-term sustainability of India’s digital payments ecosystem. It will help UPI in continuing to scale, innovate and serve consumers and businesses across the country,” it said.
With the latest framework introduced by the National Payments Corporation of India (NPCI) on Tuesday, UPI transactions above Rs 2,000 will attract an MDR of 0.4 per cent while consumers will continue to transact free of cost using UPI.
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The revised UPI MDR framework will come into effect from October 15, 2026, and will apply to select merchant transactions.
It further highlighted, “All UPI transactions - P2P and P2M - shall remain free for users. P2M UPI transactions below ₹2,000 will continue to remain free for merchants, while MDR may be levied on merchants for P2M.”
As per the central bank, a fair and appropriate distribution of MDR across ecosystem participants will support continued investment in technology, infrastructure, and acceptance networks which can enable wider UPI acceptance, strengthen customer base, and support sustained growth in transaction volumes.
“RBI remains committed to ensuring that UPI continues to be safe, seamless, affordable, and accessible, while supporting the long-term sustainability and growth of India’s world-class digital payments ecosystem,” the post read.
As per NPCI, small merchants covered under the Person-to-Person Merchant (P2PM) framework will continue to benefit from zero MDR. The category includes small vendors receiving up to Rs 1 lakh per month through UPI QR payments directly into their bank accounts.
For specified merchant categories, including railways, telecom services, insurance and fuel, a flat MDR of Rs 5 per transaction will apply to UPI payments above Rs 2,000.
The framework also proposes a dedicated fund for small merchants to support the expansion of digital payment infrastructure among existing merchants and across Tier 3 and smaller markets. (ANI)
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