NITI Aayog Official Defends 0.4% Charge on Larger Merchant Payments
NITI Aayog Vice Chairman Ashok Kumar Lahiri has defended the government’s decision to introduce a merchant charge on certain UPI transactions, arguing that businesses supporting India’s digital payments ecosystem need to operate on a sustainable basis without depending indefinitely on subsidies.
The government introduced a 0.4% fee on qualifying UPI transfers worth more than ₹2,000 made to merchants, with the new framework scheduled to take effect from October 15.
According to the supplied report, everyday person-to-person transfers and smaller UPI payments have been kept outside the charge.
Speaking on the decision, Lahiri argued that a relatively small transaction cost should be viewed in the context of maintaining a sustainable payments ecosystem.
He invoked an analogy attributed to ancient Indian thinker Chanakya about collecting revenue gradually without imposing excessive burden, while explaining the need to find ways of sustaining businesses without relying on subsidies.
Lahiri illustrated the cost by saying that, on a ₹100 equivalent basis, the charge would amount to around 40 paise, while emphasising that the framework applies to larger qualifying transactions.
He also compared the concept with charges consumers may pay for certain traditional banking services, arguing that small costs can form part of operating a sustainable financial system.
The introduction of merchant charges marks a change after years in which UPI merchant payments operated under a zero-MDR framework.
The decision has, however, drawn opposition from several quarters, including traders, shopkeepers and political parties concerned about the additional cost imposed on merchant transactions.
Government sources cited in the report said the decision was taken in the broader interest of the UPI ecosystem and is intended to strengthen its safety and security.
The development comes as UPI continues to play a central role in India’s digital payments infrastructure, connecting consumers, merchants, banks and payment service providers across the country.
