“40 Paise Won’t Kill You”: NITI Aayog’s UPI Remark Sparks Debate

India’s Unified Payments Interface (UPI) is facing a major policy change, with a 0.4% Merchant Discount Rate (MDR) set to apply from October 15, 2026, on specified person-to-merchant (P2M) UPI transactions above ₹2,000. The charge will be paid by merchants, while person-to-person payments will remain free.

The issue gained attention after NITI Aayog Vice Chairman Ashok Kumar Lahiri defended the move and argued that digital-payment businesses need to become financially sustainable instead of depending indefinitely on government support. He used the example that a 0.4% charge amounts to 40 paise on every ₹100 of an eligible transaction.

The government has clarified that customers will not be charged MDR directly and that merchants cannot pass the charge on to customers under the framework. Around 96% of merchant transactions are expected to remain unaffected, while payments up to ₹2,000 and certain small-merchant transactions will continue under zero-MDR provisions.

However, the announcement has raised concerns among traders and retailers, particularly businesses operating on thin profit margins. Industry representatives have argued that even a small percentage can become a significant cost when applied across thousands of transactions.

The debate, therefore, is bigger than “40 paise.” It is about how India balances free digital payments, merchant costs and the long-term financial sustainability of UPI.