In a clear statement issued on Wednesday, the Ministry of Finance dismissed recent reports claiming that the government was planning to levy a Merchant Discount Rate (MDR) on large-value Unified Payments Interface (UPI) transactions. The ministry termed such claims “false, baseless, and misleading”.
No fee on UPI transactions, says Centre
The official clarification was made in response to several online reports suggesting a potential move to introduce MDR charges on higher-ticket UPI transactions. The Finance Ministry warned that such speculation only leads to “needless uncertainty, fear, and suspicion among citizens,” adding that the government remains fully committed to promoting the use of UPI for digital payments.
MDR is a fee that banks charge merchants to process payment transactions in real-time. Traditionally applicable on card payments, it used to be about 1% of the transaction value. However, in 2020, the government scrapped MDR fees on UPI and RuPay transactions to promote the digital ecosystem.
UPI records significant growth in May
Backing its success, UPI continues to dominate India’s digital payments landscape. In May 2025, UPI handled 18.68 billion transactions valued at ₹25.14 lakh crore — an increase from ₹23.95 lakh crore in April, according to the National Payments Corporation of India (NPCI).
This marks a 33% year-on-year jump from the 14.03 billion transactions recorded in May 2024. The average daily transaction amount during May was ₹81,106 crore, with the daily transaction volume hitting 602 million.
UPI’s contribution to India’s digital economy
The RBI’s annual report highlighted that UPI facilitated 185.8 billion transactions in FY 2024-25, reflecting a 41% rise over the previous year. In value terms, the total reached ₹261 lakh crore, up from ₹200 lakh crore.
UPI now accounts for 83.7% of India’s total digital transaction volume, up from 79.7% in FY24. The RBI also emphasized India’s global leadership in real-time payments, with UPI contributing to 48.5% of global real-time payment transactions.
Across all platforms — including card networks and prepaid instruments — total digital payments in India surged by 35% to 221.9 billion transactions in FY25. In terms of value, this marked an 18% rise to ₹2,862 lakh crore.