MDR a Small Fee, Will Not Have Major Impact on UPI Volumes: RBI Governor Sanjay Malhotra
Governor Sanjay Malhotra said the central bank has seen no decline in UPI volumes as the 0.4% merchant fee is set to begin next week.
- On Wednesday, RBI Governor Sanjay Malhotra stated a small merchant discount rate fee will not significantly impact UPI transaction volumes, noting the Reserve Bank has observed no decline in usage since the levy was introduced.
- The government last month allowed a 0.4 per cent MDR on UPI transactions above Rs 2,000, a charge within the merchant payment ecosystem that merchants pay to banks and payment service providers.
- Shifting toward calibrated tightening, the Reserve Bank raised its benchmark rate to 5.50 per cent on Wednesday, marking the first increase in nearly four years, as the six-member Monetary Policy Committee voted unanimously.
- Malhotra said bank credit growth was expected to remain strong and support economic activity, while system liquidity is unlikely to sustain high surplus levels for an extended period.
- Rate cuts are off the table in the near term, Malhotra cautioned, citing the FCNR deposit scheme's near-USD 133 billion diaspora fundraising as evidence that India's Balance of Payments will soon return to surplus.
18 Articles
18 Articles
MDR a small fee, will not have major impact on UPI volumes: RBI Guv
Mumbai: Reserve Bank of India Governor Sanjay Malhotra on Wednesday, October 7, said levying a “small fee” in the form of merchant discount rate (MDR) will not have a “major impact” on UPI transaction volumes. “As of now, we do not see any drop in volumes. And I don’t personally think that a small fee will have a major impact on the volumes,” he told reporters at the central bank headquarters here. It can be noted that last month, the government…
MDR a small fee, will not have major impact on UPI volumes: RBI Guv Malhotra
Sanjay Malhotra, the Governor of the Reserve Bank of India, commented on the impact of MDR fees on UPI transactions. He expressed confidence that transaction volumes will remain stable despite the new fee structure. Additionally, Malhotra discussed strong credit growth and its positive effects on economic activity. He reassured that the adverse effects on asset quality in non-bank lenders are not expected.
UPI MDR From October 15: RBI Governor Sanjay Malhotra Says 0.4% Fee Unlikely to Hit Transaction Volumes
The Unified Payments Interface (UPI) is set to introduce a Merchant Discount Rate (MDR) on select higher-value merchant transactions from October 15, 2026. RBI Governor Sanjay Malhotra said the small fee is unlikely to have a major impact on UPI transaction volumes, as the new framework affects only specified person-to-merchant (P2M) payments. UPI MDR From October 15: RBI Governor Sanjay Malhotra Says 0.4% Fee Unlikely to Hit Transaction Volumes.
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