Latest news with #MerchantDiscountRate
Hindustan Times
5 days ago
- Business
- Hindustan Times
As ICICI Bank begins charging PhonePe, Google Pay, UPI hits 700 million daily transactions
India's Unified Payments Interface (UPI) has reached a new milestone, crossing 700 million transactions in a single day for the first time on August 2, according to NPCI data reported by Moneycontrol. Meanwhile, ICICI Bank has begun charging payment aggregators like PhonePe and Google Pay a fee per transaction, sparking fresh debate on the sustainability of UPI's zero-fee model. In July 2025, UPI processed a record 19.47 billion transactions totalling nearly ₹ 25.1 lakh crore.(MINT) UPI growth trajectory and new milestone In July 2025, UPI processed a record 19.47 billion transactions totalling nearly ₹25.1 lakh crore, reflecting a 35% year-on-year increase by volume and 22% by value. With daily volume steadily rising, from 628 million in June to over 700 million in early August, the government's goal of reaching 1 billion UPI transactions per day looks increasingly achievable in 2026. Mobile finder: iPhone 17 Air expected to debut later this year ICICI Bank rolls out UPI transaction charges Effective August 1, ICICI Bank has introduced a processing fee model for payment aggregators (PAs) handling merchant UPI transactions. Aggregators with escrow accounts at ICICI will be charged 2 basis points (bps) per transaction (capped at ₹6), while those without such accounts face a 4 bps fee (capped at ₹10). However, merchants who receive settlements directly into their ICICI Bank accounts are exempt from these charges. Earlier, only Yes Bank and Axis Bank among private lenders imposed similar fees. ICICI's move reflects pressure on banks to offset infrastructure costs, a burden growing amid declining government subsidies and absence of MDR (Merchant Discount Rate). Economic implications for fintech and merchants Traditionally, UPI payments have been free for both users and merchants, with fintech firms and banks absorbing backend costs, including fees paid to NPCI's UPI switch. With these new charges, PAs may choose to either absorb fees, which could squeeze margins, or pass them on to merchants, potentially raising the cost of acceptance for small businesses. UPI outlook: Targeting 1 billion transactions daily Despite the emergence of new charges, UPI continues to demonstrate robust monthly growth of 5–7% and year-on-year growth of nearly 40%, driven by increasing merchant adoption and broader digital penetration, merchant transactions alone now account for over 60% of UPI volume. As UPI approaches global dominance as the world's largest real-time retail payment system, the debate over sustainable monetisation and infrastructure funding becomes crucial. With pressure mounting on aggregator business models and calls increasing for MDR revival, with support even from the RBI, ICICI's move may mark a shift in the financial ecosystem supporting India's digital payments revolution.
Scroll.in
27-07-2025
- Business
- Scroll.in
UPI has ‘borne good fruits' but costs have to be met for service to be sustainable: RBI governor
Reserve Bank of India Governor Sanjay Malhotra has said that the Unified Payments Interface for digital payments has 'borne good fruits', but cautioned that costs have to be met for any service to be sustainable. His remarks at the Financial Express BFSI Summit in Mumbai on Friday came amid speculation that instant transactions made via UPI to large merchants may attract a fee in the future. 'Payments and money are the lifeline for any economy,' Malhotra said. 'We need to have a universally accessible and efficient system. It is a public infrastructure that needs to be provided.' He noted that currently, there are no charges for using UPI, and that the Union government is subsidising the costs for various players, banks and stakeholders. 'Obviously, some costs have to be paid,' Malhotra said. 'They will have to be defrayed. Right now, it's the government which is defraying those costs. Going forward, how those costs will be met…I am sure the government will be looking at it.' Noting that UPI constitutes important infrastructure, he added that the Union government had taken the view that it should be made available for free and was subsidising it. 'And I would say it has borne good fruits,' Malhotra said. However, the RBI governor added that such a system would only be sustainable if someone bears the cost. 'As long as it is the government or someone else…Costs of any service should be paid whether collectively or by the user,' he added. Malhotra said that the RBI was committed to providing a means of payment that was efficient, secure and accessible. 'We will ensure that we have a good, robust system working in our country,' he said. This comes amid widespread speculation that UPI payments might be subjected to a per-transaction fee called the Merchant Discount Rate, The Indian Express reported. This rate is levied on merchants by banks that process debit and credit card payments. It is usually in the 1% to 3% range. The Union government had waived the Merchant Discount Rate on RuPay debit cards and BHIM-UPI transactions in December 2019, the Financial Express reported. The reintroduction of the fee and whether users will contribute to the cost of maintaining the UPI infrastructure remains uncertain. However, the Union government had rejected reports on the Merchant Discount Rate, saying that such talk was 'completely false, baseless, and misleading', The Indian Express reported. 'Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens,' the Union Finance Ministry said on June 11. 'The government remains fully committed to promoting digital payments via UPI.'
Indian Express
25-07-2025
- Business
- Indian Express
Free UPI has borne good fruits, but cost of service has to be paid: RBI Governor Sanjay Malhotra
Amid talk of instant transactions made via the Unified Payments Interface (UPI) to large merchants possibly attracting a fee in the future, Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday said that for the payments system to be sustainable, the cost of running it will have to be borne by either the government or users. Speaking at the Financial Express BFSI Summit in Mumbai, Malhotra said UPI being free had 'borne good fruits' and led to a rapid rise in the number of transactions. However, for any service to be sustainable, its costs had to be met. According to the latest RBI data, there were 18.4 billion UPI transactions conducted in June, up 32 per cent year-on-year. 'This (UPI) is an important infrastructure. The government has taken a view it should be available free and the government is subsidising it. And I would say it has borne good fruits,' Malhotra said. 'The important thing is that the UPI, or any other payment system for that matter, is accessible, cheap, secure, and sustainable…and it will be sustainable only if someone bears the costs. So as long as it's the government or someone else — that's not so important — the important thing is that costs of any service should be paid, whether collectively or by the user.' MDR and govt subsidies for payments Speculation has been rife that UPI payments may be slapped with a per transaction fee called the Merchant Discount Rate (MDR). Usually in the range of 1-3 per cent, the MDR is levied on merchants by banks that process debit and credit card payments. Since January 2020, there has been no MDR on RuPay debit cards and UPI transactions to promote the adoption of digital payments across the country. In lieu of the lack of MDR, the government has been subsidising payments of up to Rs 2,000 made to small merchants through its 'Incentive scheme for promotion of RuPay Debit Cards and low-value BHIM-UPI transactions (P2M)'. The incentive offered is capped at 0.15 per cent of the transaction value. Large merchants are not covered under this scheme. While 80 per cent of the incentive under the scheme is paid out without any conditions, 10 per cent of the incentive is contingent upon the technical decline of the merchant's bank being less than 0.75 per cent, with the remaining 10 per cent to be paid out when the system uptime of the bank is greater than 99.5 per cent. In recent years, tech glitches in UPI transactions have increasingly come to light. 'As of now, there are no charges and the government is actually subsidising the various players, banks, and stakeholders in this whole UPI payments system. Obviously, some costs have to be paid; they will have to be defrayed. Right now, it's the government which is defraying those costs. Going forward, how those costs will be met will certainly, I am sure the government will be looking at it,' Malhotra said on Friday. From Rs 957 crore in 2021-22, the government's payout under the incentive scheme for UPI transactions rose to Rs 3,268 crore in 2023-24. The revised estimate for the total payout under the scheme in 2024-25 was Rs 2,000 crore, while Rs 437 crore has been budgeted for 2025-26. The government, however, has rejected suggestions that MDR will be charged on UPI transactions. As recently as June, the finance ministry said such talk was 'completely false, baseless, and misleading'. 'Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens. The Government remains fully committed to promoting digital payments via UPI,' the finance ministry said on X on June 11. On his part, Malhotra said the RBI remains committed to providing a means of payment that is efficient, secure, and accessible. 'And whatever needs to be done for that, we will ensure that we have a good, robust, secure, accessible payments system working in our country'. Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More
Time of India
12-06-2025
- Business
- Time of India
Paytm, Mobikwik shares tumble after finance ministry rules out MDR on UPI transactions
Investors sold Paytm and Mobikwik shares on Thursday, a day after the Finance Ministry denied reports of charges on UPI transactions. Paytm shares dropped 10% in trade today, before recovering later. The stock was trading 6.56% lower at Rs 897.20 as of 2:30 p.m. The company's market capitalisation dropped as much as Rs 6,123 crore to an intraday low of Rs 55,123 crore, but later returned to Rs 57,233 crore. Meanwhile, Mobikwik shares fell 3% to an intraday low of Rs 273.05 per share. As of 2:35 p.m., the counter was down 2.68% at Rs 273.95. The company's market value dropped to Rs 2,121 crore, before recovering slightly to Rs 2,128 crore. On Wednesday media reports claimed that the government was planning to levy a Merchant Discount Rate (MDR) on transactions exceeding Rs 3,000 via the Unified Payments Interface (UPI). Over the last few months, the digital payments industry has been abuzz about MDR coming back on UPI. During their FY25 results call with stock market analysts, senior executives at Paytm had expressed optimism about the government considering such a move. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Kulkas yang belum Terjual dengan Harga Termurah (Lihat harga) Cari Sekarang Undo The ministry later clarified that no such plan is under consideration. 'Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading. Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens. The Government remains fully committed to promoting digital payments via UPI,' a Finance Ministry post on X said. Live Events MDR is a levy charged on a merchant for processing debit and credit card transactions. UPI and RuPay debit card payments have been exempted from this charge since the presentation of Union Budget 2019-20 to promote digital transactions. Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories To support payment ecosystem participants, incentives for the promotion of RuPay debit cards and BHIM-UPI transactions (P2M) up to Rs 2,000 were announced in March. However, banks and fintechs have called the incentives insufficient and want MDR brought back for such transactions to sustain infrastructure and maintenance costs. Scale of UPI UPI processed 18.68 billion transactions worth Rs 25.14 lakh crore in May, marking a 33% increase over the year-ago period. The average daily transaction amount stood at Rs 81,106 crore, with 602 million daily transactions. For the fiscal year ended March 2024, UPI accounted for 80% of India's retail digital payments.
India Today
12-06-2025
- Business
- India Today
Confusion over UPI charges? Here's what the finance ministry has to say
The Finance Ministry has stated that speculation and claims regarding the Merchant Discount Rate (MDR) being charged on UPI transactions are completely incorrect, unfounded, and misleading. The Ministry stated that such unfounded speculation, which creates a sensation, causes unnecessary uncertainty, fear and suspicion among our people, and the government is fully committed to continuing to support digital payments via UPI. The rebuttal came after multiple reports circulated on social media claiming that the government would impose an MDR on larger UPI MDR refers to the fee that banks charge merchants to process real-time payments. Until recently, merchants would pay an MDR, for card payments, of 1% of the total value of the transaction. In 2020, the government implemented the waiver of MDR, seemingly forever, to encourage digital payments throughout the country. Confusion over UPI charges? Here's what the finance ministry has to say In May, the Unified Payments Interface (UPI) processed 18.68 billion transactions, totaling a value of 25.14 lakh crore rupees. This marks an increase from April, which recorded 23.95 lakh crore rupees in UPI transactions. Additionally, the May figures reflect a year-on-year growth of 33 percent, compared to 14.03 billion transactions in the same month last year. During May, the average daily transaction amount for UPI was 81,106 crore rupees, with an average daily transaction volume of 602 million transactions. UPI's success has firmly positioned India at the forefront of global real-time payments, capturing a 48.5 percent share by Watch
