Chennai, September 16: Pattali Makkal Katchi (PMK) president Anbumani Ramadoss has urged the Centre to withdraw its decision to introduce Merchant Discount Rate (MDR) charges on certain Unified Payments Interface (UPI) merchant transactions, recalling the government’s earlier assurance that digital payments would remain free.
Speaking to reporters in Chennai, Ramadoss said the proposed charges could increase the financial burden on merchants and consumers. He stressed that UPI was introduced to facilitate seamless and cost-free digital payments.
“When UPI was formed, the government gave a promise that there would be no charges. It will be free of cost,” Ramadoss said, appealing to the Centre to “completely withdraw this order.”
The National Payments Corporation of India (NPCI) has introduced a revised MDR framework, effective October 15, 2026. Under the framework, an MDR of 0.4 per cent will apply to select Person-to-Merchant (P2M) UPI transactions above Rs 2,000, subject to a maximum charge of Rs 300 per transaction.
Consumers will continue to use UPI free of charge, while Person-to-Person (P2P) transactions will remain completely free regardless of the amount transferred. The government has also said around 96 per cent of P2M transactions will remain unaffected by the revised framework.
The government clarified that MDR is neither a tax nor a fee collected from consumers. Instead, it is distributed among participants in the digital payments ecosystem, including banks and payment application providers, to support the operation and expansion of UPI services.
