Merchant Discount Rate (MDR)

Current Context : On 12 June 2025, the Finance Ministry clarified there is no plan to levy MDR on UPI transactions, dismissing recent speculation as “false, baseless, and misleading.”

ABOUT MDR

• Definition: Fee charged by banks/Payment service providers (PSPs) to merchants for processing digital payments in real time.
• Historical Charge: ~1% MDR on card transactions, waived for UPI since 2020 to promote digital payments.
• Rationale: Maintaining zero-cost transactions encourages wider UPI adoption among merchants and consumers.