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Informist, Thursday, Sept. 24, 2026

 

--Fin min source: Fear of return to cash due to merchant fee on UPI misplaced 
--Fin min source: To engage with trade bodies on refusal of UPI payments 
--Fin min source: To urge IBA to address misconceptions on UPI merchant fee 

 

NEW DELHI – The finance ministry will urge Indian Banks' Association to clear misconceptions regarding the merchant discount rate on payments above INR 2,000 using the Unified Payments Interface. The government will hold discussions the association to ensure the cost is not passed on to consumers, a senior finance ministry official said Thursday.

 

Separately, the government has also advised banks to monitor that the merchant discount rate is not passed on to consumers. The merchant discount rate on high-value transactions would provide an independent revenue model to banks, payment gateway and UPI aggregator, enabling them to compete for a higher share in the UPI ecosystem.

 

The ministry will also hold talks with associations of traders to ensure merchants do not refuse UPI payments, the official said. Traders bodies across India have called for a "No UPI Day" on Oct. 2 to protest the merchant discount rate on UPI transactions effective from October 15.

 

Earlier this month, the government announced the imposition of a merchant discount rate of 0.4% on merchant payments of over INR 2,000 using UPI starting Oct. 15. However, person-to-person transactions will remain completely free. Such transactions will have the rate capped at INR 300 for transactions of INR 75,000 and above, according to a government release.

 

The finance ministry official also said the central government is hopeful that the Goods and Services Tax council will take a fair and reasonable view on the 18% GST on merchant fee for UPI transactions. End

 

Reported by Sagar Sen

Edited by Deepshikha Bhardwaj

 

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