UPI users to pay only listed price: Bank chief

Punjab & Sind Bank MD and CEO Swarup Kumar Saha has said merchants cannot pass on Merchant Discount Rate (MDR) charges to customers accepting payments through the Unified Payments Interface (UPI), adding that consumers would continue to pay only the displayed price.

Under the proposed framework, effective October 15, merchant payments (P2M) above Rs 2,000 will attract an MDR of 0.4 per cent, subject to an overall cap of Rs 300. Person-to-person (P2P) transactions will remain free, irrespective of the amount.

Saha said there would be no impact on small-value UPI transactions of up to Rs 2,000, which account for more than 95 per cent of the total volume of UPI merchant transactions.

He said the proposed fee was intended to support the long-term sustainability of the digital payments ecosystem while keeping the UPI accessible and convenient for everyday transactions.

Asked whether merchants might raise prices to offset the charges, Saha said businesses generally absorbed nominal digital payment processing costs because of the benefits of higher sales volumes, increased footfall and reduced cash-handling risks.

He added that the proposed MDR was significantly lower than credit card processing fees and applied only to transactions above the specified threshold, leaving merchants with little economic incentive to increase retail prices.

Consumers would continue to pay the listed price for goods and services, Saha added.