UPI MDR Returns? What 0.28% Costs You Monthly

A senior Indian Bank executive hinted that banks may waive the proposed 0.28% MDR on UPI transactions. But if MDR returns, every UPI payment you make at a shop could quietly cost you or the merchant more money.

Here's what happened: Indian Bank's MD and CEO indicated the bank may consider waiving its share of a proposed 0.28% MDR on UPI transactions, keeping payments free for users.. MDR on UPI was abolished in 2020 by the government to accelerate digital payment adoption; its potential reintroduction has reignited debate among banks and merchants.. Bank executives broadly agree that even if MDR returns, the income boost for banks would be modest — but the cost impact on small merchants and end consumers is a real concern..

What you should do: Monitor official RBI and Finance Ministry notifications — MDR reintroduction requires a formal government directive, so ignore rumour-based panic until then.. Check whether your regular merchants start adding a 'convenience fee' or rounding up UPI bills — that's the first real-world signal that MDR costs are being passed on.. Compare UPI-linked credit cards vs debit-card UPI payments — credit card UPI transactions already carry interchange fees, so your cost structure there is different from a bank-account UPI payment..

Even if MDR returns, transactions below a government-set threshold (likely ₹2,000) may remain exempt — small daily payments could stay free while larger purchases attract the fee.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.