Government clarifies UPI MDR exemption limited to ₹2,000 transactions

The Union government has clarified its position on Merchant Discount Rate (MDR) charges for UPI transactions, stating that retailers were not assured of permanent exemptions from the fee structure. In a submission to the Supreme Court, the Centre outlined the scope and limitations of current MDR relief measures.

According to the government's statement, person-to-merchant (P2M) transactions capped at ₹2,000 are exempt from MDR charges. This threshold-based exemption forms the core of the current policy framework governing digital payment incentives for small-value transactions in the retail sector.

The clarification appears to have emerged amid ongoing legal proceedings concerning the treatment of digital payment fees and merchant obligations. The government's position underscores that any relief from MDR charges has been structured with specific transaction limits and duration considerations in mind.

The submission addresses concerns about the sustainability and scope of payment industry incentives, particularly as digital transactions continue to expand across Indian retail and services sectors. Industry stakeholders have previously debated the long-term viability of zero-MDR policies and their impact on payment service providers and merchant economics.