The Ministry of Finance on Tuesday reiterated that the Unified Payments Interface will continue to be free for end‑users and small merchants. In a clarification to recent media reports, it said merchant discount rates (MDR) will only be levied on a limited set of transactions that exceed a specified monetary threshold, leaving everyday retail purchases untouched. Under the new framework, MDR – a fee that banks and payment aggregators charge merchants for processing digital payments – will apply primarily to high‑value or business‑to‑business transfers above the threshold, which the government has not disclosed publicly.
Large retailers and e‑commerce platforms are expected to bear the cost, while small kirana stores and gig‑economy workers remain exempt. The move aims to protect consumer adoption while recouping infrastructure expenses. 4% as investors priced in higher margins for firms such as Paytm, PhonePe’s parent One97 Communications, and major banks that process UPI traffic.
The broader Sensex and Nifty showed little movement, reflecting that the policy change is seen as a targeted, not systemic, shift. Analysts note that any increase in MDR could be passed on to prices, affecting retail spend. Retail investors should monitor the final MDR threshold and its implementation timeline, as they will determine the cost pressure on large merchants and the earnings outlook for payment‑gateway stocks.