The use of UPI and RuPay debit cards is increasing rapidly in the country. Nowadays most people prefer digital payment. So far, there is no fee (MDR) on transactions made through these means. MDR i.e. Merchant Discount Rate, is the fee that shopkeepers pay to their banks for processing digital payments. At present, the government has waived this fee, but now the government is planning to implement it again.

Will MDR be imposed on big traders

According to the news published in ET, the banking industry has sent a proposal to the government. This proposal states that MDR should be re-implemented on shopkeepers whose annual turnover is more than Rs 40 lakh. The government is considering this proposal. That is, no MDR will be levied on small shopkeepers, whose annual sales are less than 40 lakhs.

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Different rates for small and big traders

According to this proposal, the government can implement a tier system. That is, big traders will be charged more and small traders will pay less or no fee. This will not affect small traders. But big traders who make digital payments of lakhs and crores every month will have to pay this fee.

Government subsidy also cut

The government had given some subsidies (grants) to banks and fintech companies in exchange for processing digital payments. But now that has also been cut. Last year there was a subsidy of Rs 3,500 crore, which has now been reduced to just Rs 437 crore. Apart from this, banks have not yet received the subsidy amount of last year. That is, the government is not giving as much assistance to payment companies as they need.

How much will it affect big traders

Industry people say that big merchants already pay up to 1% MDR on their card payments (such as Visa, and MasterCard), so even if some fee is imposed on UPI, they will not be affected much. Because big brands and companies do more than 50% of transactions through card or digital mode, it will be easy for them to manage this expense.

Concerns of Fintech companies

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According to Fintech companies (PhonePe, Google Pay, Paytm), they are incurring huge losses due to no charge on UPI. According to NPCI data, there were 16 billion (1.6 billion) UPI transactions in February 2025, with a total value of about Rs 22 lakh crore. It is becoming difficult for payment companies to maintain the infrastructure, provide security, and keep the system running to process such a large number of transactions without charges.