Hyderabad: Telangana BJP president N. Ramchander Rao on Wednesday said UPI P2P payments would remain free, irrespective of the amount transferred. He also sought to counter what he described as misinformation over UPI charges.
Rao said the Merchant Discount Rate, or MDR, was not a government tax. Instead, he described it as a payment made to banks and payment-service providers for processing transactions.
He said merchant payments of up to ₹2,000 would also remain free. Moreover, transactions covered by the zero-MDR framework for small merchants would not attract charges.
According to Rao, about 96 per cent of person-to-merchant transactions would remain unaffected. RuPay debit-card payments would also continue without charges, he said.
UPI P2P payments remain outside MDR framework
Rao said the government had provided financial incentives to support the UPI ecosystem over several financial years. He cited incentives of ₹1,389 crore, ₹2,210 crore and ₹3,631 crore during the financial years from 2022 to 2024. In addition, he said ₹2,196.21 crore had been provided for FY 2025-26.
The government also made a budgetary allocation of ₹2,000 crore for FY 2026-27, according to Rao. Meanwhile, the BJP leader cited the rapid expansion of digital transactions to underline the need for continued investment in payment infrastructure.
He said UPI recorded 24,162 crore transactions worth ₹314.23 lakh crore during FY 2025-26. That translated into an average of about 66 crore transactions each day, he added.
Rao said the growth of digital payments would require substantial investment in information technology infrastructure. Such investment was necessary to maintain the system’s long-term reliability and sustainability, he added.
He further clarified his position on how MDR worked within the payment ecosystem. According to Rao, neither the government nor NPCI collected MDR as a tax or government charge.
Instead, he said the amount was distributed among participants in the payment ecosystem. The payment supported the operation, maintenance and expansion of infrastructure required for digital transactions.
Rao maintained that UPI P2P payments would continue without charges while the payment ecosystem expanded to handle growing transaction volumes.