Recommended Free Tools
The Kerala Legislative Assembly on 15 October 2026 passed a motion urging the Union government to withdraw the proposed Merchant Discount Rate (MDR) on certain UPI person-to-merchant payments above ₹2,000. The motion is a political appeal, not a change to national payment law, so it does not by itself stop the Union government or the National Payments Corporation of India (NPCI) from implementing the announced framework.
What the Kerala Assembly decided
The Assembly’s motion objects to a proposed MDR on specified person-to-merchant (P2M) UPI transactions exceeding ₹2,000. PTI reported Chief Minister V. D. Satheesan’s argument that the charge could raise business costs, be passed through in prices and weaken digital-payment adoption, especially during inflation. The report also described concerns about the effect on ordinary users and small businesses.
As an Amazon Associate I earn from qualifying purchases.
The motion asks the Union government to withdraw the proposal. Kerala’s legislature cannot, through a state resolution, repeal or suspend Union payment legislation. The national framework and its implementation remain matters for Union authorities and the NPCI-led process.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
What the proposed Union framework would charge
The Finance Ministry’s 15 September 2026 explanation distinguishes between the type of transaction, its value and the merchant’s category.
#1 Best Overall
| Transaction or merchant category | Proposed treatment | Who is charged |
|---|---|---|
| Person-to-person (P2P) UPI, any amount | Remains free | No consumer transaction charge |
| P2M payment up to ₹2,000 | Remains free | No consumer transaction charge |
| Qualifying small merchant receiving up to ₹1 lakh a month through a UPI QR code under the P2PM category | Zero MDR | Merchant ecosystem receives no MDR for this category |
| Specified P2M payment above ₹2,000 | 0.4% MDR, with a ₹300 cap for transactions of ₹75,000 or more | Merchant payment ecosystem, not the consumer as a separate UPI fee |
| Essential sectors above ₹2,000, including railways, telecommunications, insurance, fuel and agricultural inputs | Flat ₹5 MDR | Merchant payment ecosystem |
| Capital-market payments | 0.02% MDR, capped at ₹300 | Merchant payment ecosystem |
The Ministry estimates that about 96% of P2M transactions would remain unaffected. Its 8 August 2026 statement said, “No charges for users: Consumers making payments will not face any transaction charges.” The proposed MDR is described as a fee within the merchant payment chain, shared among acquiring and issuing banks, payment-service providers and UPI application providers.
Will a UPI user be charged above ₹2,000?
Under the announced Union position, a consumer is not supposed to see a separate UPI transaction charge, even when a qualifying merchant payment exceeds ₹2,000. The proposed 0.4% MDR is assessed within the merchant ecosystem. For example, on a ₹10,000 transaction covered by the standard category, the MDR calculation would be ₹40 before any applicable allocation among participating providers; it is not described as a ₹40 fee added to the payer’s UPI bill.
Rank #2
- Ideal for Gifting
- Ideal for a bookworm
- Compact for travelling
That does not guarantee that every merchant will absorb the cost. A business could reduce its margin or alter prices to account for payment expenses. Such indirect effects are the central concern raised in Kerala’s motion, rather than a stated plan to debit consumers directly for using UPI.
Why the proposal is contested
Kerala’s objection
The Assembly’s position is that even a limited merchant charge can become an additional operating cost. Merchants may pass it into prices, and smaller businesses may view it as a reason to prefer cash or other payment methods. Kerala’s argument treats the zero-MDR model as part of UPI’s appeal and warns that a new cost could reduce usage.
The Union government’s case
The Union government says a carefully limited MDR can support the long-term financial sustainability of the UPI ecosystem while preserving free access for users, P2P transfers and most small merchants. The Ministry’s estimate that roughly 96% of P2M transactions remain unaffected is intended to show that the proposal is targeted rather than universal.
How this differs from the earlier zero-MDR system
MDR on P2M UPI transactions was removed effective January 2020, according to a Finance Ministry clarification issued in April 2025. A Lok Sabha answer dated 18 August 2025 also cited Section 10A of the Payment and Settlement Systems Act, 2007, which prevents a bank or system provider from imposing a charge on a payer or beneficiary using prescribed electronic modes. UPI and RuPay debit cards had been notified under the Income-tax Act, and the government reported approximately ₹8,730 crore in incentives from financial year 2021–22 through 2024–25 to support continuity of UPI services.
Rank #4
The proposed framework therefore represents a policy shift from the post-2020 zero-MDR approach for specified merchant payments. The Finance Ministry has said that the NPCI-led UPI and Services Steering Committee would decide MDR after the relevant legislation, so the final operational rules and effective date should be checked against the latest Ministry, NPCI or parliamentary notice.
Quick wins for a faster PC:
Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Repair Windows errors before they cause bigger problemsFix Now →Does Kerala’s resolution stop the charges?
No. A state Assembly resolution records Kerala’s political position and urges action by the Union government; it is not a national regulation. Unless the Union government changes the framework, Parliament alters the legal basis or the responsible national bodies defer implementation, the announced categories and rates remain the applicable proposal. The official Assembly resolution text and a verified vote tally were not available in the cited public account, so the motion’s wording and arguments are attributed to the PTI account.
Quick Recap
Best Value
- It can be a gift option
- Comes with secure packaging
- Helpful in various ways
What users and merchants should watch
- Transaction type: P2P transfers are treated differently from payments to a business.
- Amount: The ₹2,000 threshold applies to the specified P2M categories, not to P2P transfers.
- Merchant status: A small merchant’s monthly UPI-QR receipts and P2PM classification determine eligibility for zero MDR.
- Sector: Essential services and capital-market payments have separate rates and caps.
- Price effects: A merchant may face an ecosystem cost even though the payer is not billed a separate UPI fee.
- Timing: Operational details and the rollout date remain subject to further Union and NPCI notices.
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
