UPI charges cap at ₹300: NPCI sets 0.4% fee for transactions over ₹2,000
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Digital Public Infrastructure sustainability: a key GS3 Economy and Digital India case study.
Why in news
The National Payments Corporation of India (NPCI) introduced a Merchant Discount Rate (MDR) framework for UPI to sustain operations and expand services.
Background
NPCI's new framework, effective October 15, mandates a 0.4% charge for merchant transactions exceeding ₹2,000, capped at ₹300. Person-to-person (P2P) transactions remain free, while essential sectors like railways and fuel face a flat ₹5 fee for transactions over ₹2,000.
Facts for Prelims
- BodyNPCI: National Payments Corporation of India is the body responsible for the UPI framework.
- FactMDR: A 0.4% charge is applicable for merchant transactions above ₹2,000.
- FactCap: The maximum charge for merchant transactions under the new framework is capped at ₹300.
- FactEssential Sectors: Railways and fuel transactions over ₹2,000 attract a flat fee of ₹5.
Prelims practice question
What is the flat fee applicable for transactions over ₹2,000 in essential sectors like railways and fuel?
- (a)₹50
- (b)₹20
- (c)₹5
- (d)₹10
Show answer
Answer: (c) ₹5 — The note specifies that essential sectors like railways and fuel face a flat ₹5 fee for transactions over ₹2,000.
For Mains
Q. Discuss the significance of introducing a Merchant Discount Rate (MDR) for UPI in ensuring the sustainability of India's digital payment infrastructure.
Dimensions to cover in your answer
- Infrastructure sustainability: Balancing zero-cost user experience with the operational costs of banks and app providers
- Digital inclusion: Ensuring that MDR implementation does not disproportionately burden small-scale merchants in essential sectors
Keywords: Digital Public Infrastructure · Merchant Discount Rate · Financial Sustainability · Payment Ecosystem · Monetary Policy
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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.