New Delhi: The calibrated Merchant Discount Rate (MDR) framework for large-value UPI merchant transactions will help strengthen the long-term sustainability of India’s digital payments ecosystem while supporting continued investment in technology and payment infrastructure, industry body ASSOCHAM said on Wednesday.
ASSOCHAM President Nirmal K. Minda said the framework would enable the UPI ecosystem to continue scaling and serve consumers and businesses across the country. According to the industry body, the framework provides for a fair distribution of MDR among ecosystem participants, which could support wider UPI acceptance, expand the customer base and sustain growth in transaction volumes.
ASSOCHAM clarified that UPI transactions will remain free for users, while person-to-merchant (P2M) transactions below Rs 2,000 will continue to remain free for merchants. The industry body said around 96 per cent of merchant transactions would remain unaffected under the framework, ensuring continued access to affordable digital payments.
Commenting on the issue, Indo Wings CEO Paras Jain, speaking from Noida, said it was important to clearly distinguish between consumer charges and MDR applicable to certain merchant transactions. He said person-to-person UPI transactions do not attract any charges and UPI payments for consumers will remain free through 2030.
Jain said MDR applies to certain merchant transactions above Rs 2,000, but the charge is borne by the merchant and cannot be passed on to customers as an additional fee. He acknowledged that the framework could have some impact on small businesses, particularly merchants operating on thin margins.
At the same time, Jain said maintaining a fast, secure and convenient digital payment system such as UPI also involves costs. He stressed the need to ensure the economic sustainability of the broader UPI ecosystem so that the facility remains secure, accessible and convenient for consumers.
ASSOCHAM said the framework would support UPI’s continued growth while strengthening investment in technology, payment acceptance networks and digital infrastructure, thereby enabling the system to expand its reach and foster further innovation.
(IANS)
