Indian Bank contemplates waiving acquiring bank charges for UPI MDR

Chennai: In a bid to ease the proposed Merchant Discount Rate (MDR) charges on UPI transactions, public sector Indian Bank is considering to waive off the acquiring bank charges. Out of the 0.4% MDR to be introduced for Person-to-Merchant (P2M) UPI transactions from Oct 15, 0.28% share will go to the acquiring banks. Considered on the lines of a waiver for credit card and debit card transactions by the lenders, the move would bring down the MDR on UPI transactions for merchants.“Historically, MDR is being levied on credit cards and debit cards. But, when we see the transaction volume and if there is a good transaction, we are waiving it (MDR) completely. In some cases, we are charging a partial MDR. So, it is on these lines that we are looking at absorbing the MDR for UPI transactions,” Indian Bank MD and CEO Binod Kumar told TOI on Wednesday.While MDR of 0.4% will be introduced on P2M UPI transactions above Rs 2,000, it has been capped at Rs 300 per transaction for transactions above the value of Rs 75,000. However, small merchants operating under the Person-to-Person-Merchant (P2PM) framework, who receive up to Rs 1 lakh per month through UPI QR directly into their accounts, will continue with zero MDR. According to the policy, consumers making payments through UPI will not face any charges. Further, merchants should not be passing MDR to customers.Asked whether the bank has developed any mechanism to monitor P2M transactions post-MDR, he said it will be ready in another five to 10 days. “Through this, we will see how much actual transaction has been made and what is paid by the customer. For instance, when a transaction is made for Rs 3,000, but 3.05, 3.1, and 3.2 is being charged, we will monitor such transactions. We are developing an Application Programming Interface (API) to capture the transaction and flag if there are any issues,” Kumar added.Indian Bank has recorded 32.6 crore UPI transactions in the past six months in FY27. Of this, 1.6 crore transactions or about 5% are above the value of Rs 2,000. The state-owned lender has around 21.2 lakh P2Ms and 8.2 lakh P2PMs under its ambit as of Sept 30, 2026.Indian Bank contemplates waiving acquiring bank charges for UPI MDRYou use AI every day. Now get your AI Quotient. Take the AIQ test.