Small UPI fee unlikely to hit transaction volumes, says RBI Governor

Speaking after the RBI's October monetary policy review on Wednesday, Malhotra said the central bank does not expect a significant fall in UPI transaction volumes after the introduction of a limited merchant discount rate (MDR).Under the new framework, the National Payments Corporation of India (NPCI) has fixed an MDR of 0.4% on eligible digital transactions above Rs 2,000 from October 15. (Photo: Reuters)New Delhi,Oct 7, 2026 16:46 ISTA small fee on certain UPI merchant transactions is unlikely to make people use digital payments less, according to Reserve Bank of India (RBI) Governor Sanjay Malhotra.Speaking after the RBI’s October monetary policy review on Wednesday, Malhotra said the central bank does not expect a significant fall in UPI transaction volumes after the introduction of a limited merchant discount rate (MDR).Malhotra was asked whether the introduction of MDR from October 15 could lead to a fall in UPI transactions and whether the RBI could step in to bear the cost in the wider public interest.He said the decision to introduce the charge had already been taken and indicated that the RBI did not expect it to materially affect the use of UPI. The comments come as UPI moves away from its long-standing zero-MDR model for a limited category of higher-value merchant payments.Under the new framework, the National Payments Corporation of India (NPCI) has fixed an MDR of 0.4% on eligible digital transactions above Rs 2,000 from October 15. MDR is a fee linked to merchant payments and is charged within the payments ecosystem. The new charge is not meant to be directly passed on to consumers. This means customers will not have to pay an additional fee when they make eligible UPI payments.Meanwhile, the government has maintained that the move is aimed at supporting the long-term sustainability of digital payments while keeping UPI free for consumers.- Ends