Finance Minister Nirmala Sitharaman stated that the merchant discount rate (MDR) on Unified Payments Interface (UPI) transactions will affect businesses rather than users. She made these remarks in response to Congress leader Jairam Ramesh's comments on the issue, clarifying the government's position on the impact of MDR charges on digital payments.
Sitharaman addressed the criticism by emphasizing that the MDR charges are imposed on merchants who accept payments through UPI, not on the consumers using the platform. She highlighted that the government’s policy aims to balance the interests of businesses and digital payment users while maintaining the sustainability of the payment ecosystem. Her comments came amid ongoing debates about the financial burden of MDR on small and medium enterprises.
The MDR on UPI is a significant policy point in India's digital payments landscape, where UPI has become a dominant mode of transaction. The discussion around MDR reflects broader concerns about the cost structure for merchants and the long-term viability of digital payment platforms. The government’s stance contrasts with opposition claims that MDR could discourage digital payment adoption by increasing costs for users.
The Finance Ministry’s clarification on MDR was published on August 6, 2026, in The Economic Times, underscoring the official position that MDR charges are targeted at businesses. This statement is part of the ongoing dialogue on digital payment regulations as India continues to expand its fintech infrastructure.