UPI Payment: Government to step up monitoring of UPI payment charges; no burden on customers..

Amid the implementation of the Merchant Discount Rate (MDR) on UPI payments, the government is ensuring that the burden does not fall on customers. The government is focusing on the implementation mechanism and preparing to strengthen monitoring to prevent the levy of any unfair or hidden charges on customers.

The government has directed banks not to pass on MDR costs associated with merchants to customers. Additionally, emphasis is being placed on preventing UPI apps from imposing hidden or extra platform charges. Discussions have been held with payment aggregators and other stakeholders in the payments sector to address potential shortcomings in the MDR implementation process. The government also intends to monitor attempts by merchants to levy separate UPI charges on customers and is working to strengthen the surveillance system to ensure customers do not incur extra charges when making UPI payments.

Which UPI payments are exempt from MDR?
Person-to-Person (P2P) UPI payments will remain completely free. Furthermore, most merchant payments up to ₹2,000 have been kept outside the purview of MDR. However, an MDR of 0.02% has been fixed for UPI payments related to stock and capital markets, with a maximum cap of ₹300 per transaction. This rate was determined following consultations with the Securities and Exchange Board of India (SEBI), stock exchanges, and relevant stakeholders.

SEBI to review stock brokers' concerns
SEBI has stated that it will review concerns raised by stock brokers regarding MDR. Particular attention will be paid to instances where a customer transfers funds via UPI but does not subsequently execute a trade; brokers have expressed concerns regarding the cost and impact of MDR in such cases. The government maintains that MDR is not a charge to be recovered from the customer. This is a charge shared among the various parties involved in the payment ecosystem. Its purpose is to provide the necessary resources to ensure the continuous operation of the UPI system and facilitate its future expansion.

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