The government is working on a plan that will pass on the costly benefits of its popular Unified Payments Interface (UPI) to consumers and motivate its use in one place, three people said with discussions. The ministry officials will soon meet with the part of the industry to move this plan forward, one of three people said on condition of anonymity.
Each time the credit card has ran over, the trader pays the bank a fee of 2-3% and a payment gateway such as Visa or MasterCard, entitled Business Discount Rate (MDR). Most merchants do not pass the fee to the customer, but absorbs it itself.
Illustrate, va £100 credit card payments, trader keeps £98 and passes £2 as MDR. In UPI, the trader retains a total £100 because UPI does not have MDR. The difference is in the Stark Electronic Trading platforms that charge the same amount regardless of the payment regime. In retail stores, while most traders absorb MDR, some give it to customers.
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If plans go through, UPI user pays £98 while a credit card user pays £100, which means a £2 discount for the first.
The Ministry will consult the leader of electronic trading, banking service providers, India National Payments Corp. In India (NPCI), the Ministry of Finance (DFS), consumer groups and others before the completion of the journey forward, the third party added. Plans are still early and after the meeting of the parties are probably expected to be further details, the person said.
Inquiries of the Ministry of Consumer’s Ministry remained unanswered.
The radical plan comes at once UPI has eaten all other payment regimes and increased by 42% volume to 185.85 billion transactions in FY25 and 30% to value to value £260.56 trillion. Between FY20 and FY25, UPI transaction volumes have expanded at a composite annual growth rate (Cagr) 72%. Between FY22 and FY25, about 260 million new users and 55 million new traders joined the UPI platform. In 2024, approximately 450 million UPI used.
Experts in the field said that this step opens up space for multiple nuances. Vivek Iyer, leader of the risk of partner and financial services in Thornton Bharat Grant, said: “Initiatives on the infrastructure market, such as UPI, have democratized payments due to zero MDR.
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Iyer added that electronic trading platforms can accept a layered strategy. “For luxury purchases, the choice of a payment channel may not influence buyers’ behavior, but for regular purchases the price is much higher. There is room for designing differentiated offers around it.”
He stressed that zero MDR on UPI should continue, due to its broader economic impact. “UPI allows you to include many commercial activities in a formal economy. It serves the national interest and should focus on this goal for several more years.”
With countries such as Singapore, Sae and France, which show interest in the acceptance of UPI, they believe that the alignment of domestic policy, which would reflect its cost benefits for consumers, could strengthen the Indian digital public infrastructure and strengthen its leadership in inclusive Fintech.
“Consumers currently pay the same, whether they use a card or UPI, even though the cost structure differs,” said the other person who is involved in discussions. “If UPI is cheaper and easier, we are looking for ways to make users more visible.”
Owners of enterprises usually negotiate fees for MDR before logging in to card passing machines based on the value of the transaction they expect from customers. The high MDR is one of the main reasons why traders prefer card -based payments.
“This step will certainly benefit consumers. They would be rewarded for using UPI as their way of payment,” said Ashim Sanyal, CEO of Consumer Voice, an organization for consumer rights.
Finance Minister Nirmala Sitharaman has recently emphasized the need to target one billion UPI transactions per day over the next 2-3 years and emphasized the acceleration of UPI internationalization through interoperable frames and expanding global payment of payments.
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India Reserve Bank of India wants banks of credit and debit card publishers to provide customers with opportunities to choose from multiple payment networks – such as visa, MasterCard and Rupay – at the time of release. UPI’s popularity pushed banks to issue Rupay cards that facilitate UPI transactions. Rupay credit cards attract MDR 1-2%.
According to experts, traders have set prices of products that remain the same for all payments regimes. The only advantage for consumers in the form of lower prices is when the trader only accepts UPI payments.
Meanwhile, the Indian Payment Board, which represents various non-banking payment players, unsuccessfully lobbied on the government to introduce MDR on UPI and Rupay debit cards and point out the cost of running back-end systems. Proposed to MDR for Rupay debit cards for all merchants and MDR 0.3% for UPI, applicable only for large merchants with the annual sale of the above £20 lakh. The Council claims that this is necessary for the long -term viability of the system, as zero fees prevent payment companies, banks and fintech companies in investing in critical areas such as cyber security, innovation and improving infrastructure.
(Tagstotranslate) Trade rate of merchant
