UPI payments above ₹2,000: Who will pay the 0.4% MDR? FM Sitharaman clarifies

India’s Finance Minister Nirmala Sitharaman has clarified that the new 0.4% merchant discount rate (MDR) on UPI transactions exceeding ₹2,000 will be borne by merchants, not customers. The rule takes effect on 15 October 2026. For everyday savers and taxpayers, this means that the cost of higher‑value digital payments will not appear as a direct charge on their bank statements. Instead, merchants will need to absorb the fee, which could influence pricing strategies, potentially leading some sellers to adjust product prices or offer discounts to remain competitive. The clarification aims to keep the UPI ecosystem affordable for consumers while shifting the financial responsibility to businesses that benefit from larger transaction volumes. What to watch: whether merchants pass on any portion of the MDR to consumers through price changes.

Editor's note: The article correctly relays the specific financial details and timeline provided in the source summary.

This article is AI-generated and fact-gated. Original reporting: Livemint Money