With reference to UPI transaction costs and currency values, consider the following statements: 1. The proposed merchant discount rate is 0.4% for UPI transactions exceeding ₹2,000. 2. The rupee hit an all-time low of 98.50 against the USD in October 2026. 3. The RBI Governor stated that the discount rate will significantly reduce UPI transaction volumes. Which of the statements given above is/are correct?

RBI Governor says 0.4% merchant discount rate won't significantly impact UPI volumes

GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims· 7 October 2026

Impact of transaction costs on digital payment adoption and currency stability: a GS3 and Economy case study.

Why in news

RBI Governor Sanjay Malhotra stated that a 0.4% merchant discount rate for UPI transactions above ₹2,000 will not significantly impact transaction volumes.

Background

RBI Governor Sanjay Malhotra addressed the impact of a 0.4% merchant discount rate on UPI volumes in Mumbai on October 7, 2026. He also commented on the rupee hitting an all-time low of 96.96 against the USD.

Facts for Prelims

FactThe rupee hit an all-time low of 96.96 against the USD as of October 2026.
FactThe proposed merchant discount rate is 0.4% for UPI transactions exceeding ₹2,000.

Prelims practice question

With reference to UPI transaction costs and currency values, consider the following statements:

The proposed merchant discount rate is 0.4% for UPI transactions exceeding ₹2,000.
The rupee hit an all-time low of 98.50 against the USD in October 2026.
The RBI Governor stated that the discount rate will significantly reduce UPI transaction volumes.

Which of the statements given above is/are correct?

(a)1 only
(b)2 only
(c)2 and 3 only
(d)1, 2 and 3

Show answer

Answer: (a) 1 only — Statement 1 is correct. Statement 2 is incorrect: The rupee hit an all-time low of 96.96 against the USD. Statement 3 is incorrect: The RBI Governor stated it will not significantly impact UPI volumes.

For Mains

Q. Analyze the implications of introducing merchant discount rates on the growth and adoption of the Unified Payments Interface (UPI) in India's digital economy.

Dimensions to cover in your answer

Cost-push friction: Potential for small merchants to pass on transaction costs to consumers
Digital public infrastructure: Balancing ecosystem sustainability with the goal of universal financial inclusion
Monetary stability: Managing currency volatility amidst shifting global trade dynamics

Keywords: Digital Public Infrastructure · Monetary Policy · Financial Inclusion · Transaction Costs · Currency Volatility

Read the full news →Report a mistake in this note Source: The Hindu ↗Also: GS2 · e-Governance & citizen services

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