The Indian government and the National Payments Corporation of India (NPCI) have issued a clarification regarding the nature of fees associated with Unified Payments Interface (UPI) transactions. In response to public concern, officials emphasized that the Merchant Discount Rate (MDR) is strictly a payment-processing fee charged to merchants, rather than a tax, cess, or surcharge imposed on the general public.

According to government sources, the vast majority of UPI transactions—approximately 96%—will remain unaffected by these processing charges. The clarification serves to distinguish between standard operational costs incurred by payment service providers and government-levied taxes. By labeling the MDR as a merchant-side expense, the authorities aim to reassure consumers that the digital payment ecosystem remains accessible and cost-free for individual users. While the government has provided these figures, the report does not detail the specific criteria used to define the 4% of transactions that may be subject to these processing fees, nor does it provide a breakdown of how these costs are distributed among various merchant categories.