Don't put a toll on UPI: Why merchant discount rate isn't the answer

India's government is considering introducing a merchant discount rate (MDR) on UPI payments for businesses with ₹1-1.5 crore turnover on transactions above ₹2,000, but policy experts argue this would undermine the frictionless payment system and violate the Payment and Settlement Systems Act; they propose alternative funding mechanisms including independent cost studies, a sustainability fund, and optional value-added service charges instead. If you've built your checkout or payments infrastructure around zero-cost UPI, a threshold-based MDR would force you to rebuild billing logic and raise prices on customers earning ₹1-1.5 crore—or watch them fragment transactions to dodge fees. The statutory case against MDR is strong, but the cost pressure on RBI and banks is real; the policy fight is live.