RBI endorses merchant discount rate on high-value UPI payments

The Reserve Bank of India has thrown its weight behind the implementation of merchant discount rates (MDR) on high-value UPI transactions, positioning the move as essential for the payment system's long-term sustainability. In a statement posted on social media, the RBI clarified that customers using UPI will face no charges under the new framework, with costs borne by merchants instead.

The central bank's endorsement comes as the UPI ecosystem faces pressure to monetize its operations while maintaining the accessibility that has driven its rapid adoption across the country. By directing MDR charges toward merchants rather than consumers, the RBI aims to preserve the user-friendly nature that has made UPI a preferred payment method for millions of Indians.

The RBI emphasized that the measure will enable UPI to continue scaling operations and driving innovation across both consumer and business segments. The regulatory backing signals confidence in the framework's design as a balanced approach to sustaining the platform's growth trajectory without imposing direct costs on end-users.

The move comes amid growing discussions in the fintech sector about how to ensure the long-term viability of India's digital payments infrastructure while maintaining competitive pricing and widespread accessibility across economic segments.