Sitharaman says proposed UPI merchant fee would not be passed on to consumers
The Finance Minister said a proposed UPI merchant discount rate would be a service-provider fee rather than a tax, while reiterating the Centre’s push to incentivise domestic manufacturing and reduce import dependence.
What happened
Finance Minister Nirmala Sitharaman said the Centre is incentivising domestic manufacturing to reduce import dependence. She also clarified that proposed UPI
Key facts
- 80%
- 20%
- 3%
Why this matters
Payments, fintech and merchant-acquiring teams should assess partnership opportunities around UPI processing as policy clarifies who absorbs service-provider fees.
What to watch
- Finance Ministry, RBI, NPCI, and industry consultation papers defining MDR, payer, merchant-size thresholds, and exemptions.
- Any explicit ban on merchant pass-through, convenience fees, or differential pricing by payment method.
- Changes to government UPI incentive/subsidy allocations and reimbursement timing for banks and payment service providers.
- Announcements from large acquirers, banks, and fintechs on merchant pricing or enterprise UPI products.
- Merchant association reactions and evidence of altered checkout incentives or reduced UPI acceptance among micro-merchants.
- Model UPI acceptance costs under 10-30 bps MDR scenarios and identify margin exposure by category and basket size.
- Renegotiate acquirer, gateway, and bank contracts; seek volume-based pricing and bundled fraud, reconciliation, and settlement services.
- Improve tender steering at checkout without adding consumer surcharges, including selective incentives for lower-cost payment methods where permitted.
- Segment payment acceptance strategy for small-format stores, marketplaces, and high-frequency low-ticket transactions.
- Track whether payment providers begin charging for value-added services even if core UPI transactions remain subsidized.
Also reported by
- The Hindu BusinessLine — Same time